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1922 
Copy 1 



REPORT 



OF THE 



FEDERAL TRADE COMMISSION 



ON 



WAR-TIME COSTS AND PROFITS OF 

SOUTHERN PINE LUMBER 

COMPANIES 



MAY 1, 1922 



oo W^-2- 




WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1922 



^M»>— ^» «— — I — — II ■ I »i «— »i 






REPORT 

OF THE 

FEDERAL TRADE COMMISSION 

ON 

WAR-TIME COSTS AND PROFITS OF 

SOUTHERN PINE LUMBER 

COMPANIES 



MAY 1, 1922 




WASHINGTON 
GOVERNMENT PRINTING OFFICE 

1922 



01 



5 i 



A* 



FEDERAL TRADE COMMISSION. 



Nelson B. Gaskill, Chairman. 

VlCTQB MURDOCK. 

John F. Nugent. 
Huston Thompson. 

J. P. Yoder, Secretary. 



ADDITIONAL COPIES 

OF THIS PUBLICATION MAY BE PROCURED FROM 

THE SUPERINTENDENT OF DOCUMENTS 

GOVERNMENT PRINTING OFFICE 

WASHINGTON, D. C. 

AT 

15 CENTS PER COPY 



V7 



LIBRARY OF CONGRESS 
3ECEIVED 

DEC 221922 



V\ 



CONTENTS. 

Page. 

Acknowledgment viii 

Letter of submittal ix 

Summary. 

Cost-accounting methods xi 

Rates of return on investment xn 

Effect of appreciation on costs, investments, and profits xiii 

Earnings grouped according to investment xiv 

Earnings grouped according to quantity sold xiv 

Investment per unit of lumber produced xiv 

Earnings grouped according to duration of operations xv 

Unit costs, sales realization, and profits xv 

Unit costs and profits according to quantities sold xvn 

Prices since the beginning of the war xvn 

Proposed current reports xviii 

Chapter I. — General Survey. 

Sec. 1. Origin and scope of the Commission's cost work 1 

Origin of the investigation 1 

Scope of the Commission's war work 1 

Source of data 1 

Scope of the report 2 

Sec. 2. Development of the lumber industry 2 

Importance of the lumber industry 2 

Migration of the lumber industry 3 

Decrease in lumber consumption 4 

Present and future timber supplies 4 

Concentration of timber ownership 5 

Sec. 3. Relative importance of southern pine 5 

Southern pine standing timber 5 

Production of southern pine lumber 6 

Exports of southern pine 7 

Southern pine producing and distributing agencies 7 

Chapter II. — Accounting Conditions, Methods, and Problems. 

Sec. 1. Accounting conditions 9 

Conditions of lumber accounts 9 

Lack of information regarding production 10 

Sec. 2. Accounting methods and problems 11 

Unit costs 11 

By-product costs 12 

Interest 13 

Inventories 13 

Repairs and improvements * 13 

Depreciation 14 

Stumpage 14 

Two methods of handling stumpage in cost 15 

Capitalization of interest in the timber account 16 

Stumpage and cut-over lands 17 

Carrying charges in costs 1 18 

Sec. 3. Importance of good accounting methods 18 

Chapter III. — Investments and Earnings. 

Sec. 1. Scope of discussion 20 

Government control, 1917-18 20 

Nature of investments 20 

Number of companies included 21 

hi 



IV CONTENTS. 

Page. 

Sec. 2. Investment and earnings on investment j2 

Reported investment and earnings for 143 identical companies 

High and low rates for identical companies 

Stumpage appreciation in investment and earnings 23 

Appreciation in the accounts of 57 companies 23 

Fifty-seven companies grouped according to rates of return on 

investment 25 

Appreciation in the accounts of 143 companies ^__ 26 

Analysis of revised rates of return on investment 27 

Rates of return on investment by groups : 27 

Companies grouped according to investment 29 

Proportion of investment and earnings grouped according to volume 

of sales 30 

Sec. 3. Investment per thousand feet of lumber produced 32 

Variation of investment with timber supply 32 

Earnings of companies grouped according to life of operations 35 

Chapter IV. — Unit Costs, Sales Realization, and Profits. 

Sec. 1. Cost methods and production covered 37 

The problem of lumber costs 37 

Discussion restricted to averages 37 

Number and grouping of companies 37 

Production covered 38 

Volume of sales 39 

Average size of companies 39 

Sec. 2. Unit costs, sales realization, and profits, 205 companies 40 

Cost of sales, sales realization, and earnings per thousand feet board 

measure . 40 

Average costs, sales realization, and earnings 41 

Interest, income and excess-profits taxes 41 

High and low costs, sales realization, and profits for individual 

companies 42 

Costs and earnings by size of companies 43 

Unit production and selling costs 44 

Average costs 45 

High and low costs 46 

Stumpage 46 

Logging 47 

Manufacturing 48 

General and administrative expense 48 

Shipping expense 49 

Selling expense 49 

By-products 50 

Net cost to produce and sell 51 

Proportion of total production in specified cost groups 51 

Proportion of production in specified ranges of stumpage cost 52 

Proportion of production in specified ranges of logging costs 53 

Proportion of production in specified ranges of manufacturing 

costs 54 

Proportion of production in specified ranges of general adminis- 
trative, shipping, and selling costs 55 

Graphical presentation of proportion of production in specified 

ranges of cost •. 55 

Maximum costs to produce various percentages of the output 56 

Sec. 3. Unit costs, sales realization, and profits. 143 companies 56 

Average cost of sales, sales realization, and profit before and after 

revision for appreciation 

Costs and earnings by size of companies 

Cost of sales, sales realization, and earnings per thousand feet 

Average unit cost of sales, sales realization, and profit 01 

Unit production and selling costs by operations 62 



CONTENTS. V 

Chapter V. — Recent Price Movements. 

Paj?e. 

Sec. 1. Government price regulation 64 

Conditions leading up to regulation 64 

Prices for Government cantonment stock 65 

Prices of Virginia and Carolina pine 06 

Prices for wooden-ship schedules 66 

Sec. 2. Price historv 67 

Prices, 1913-1916 67 

Prices, 1917-1921 67 

Proposed current reports 70 

TABLES. 

1. Proportion of lumber produced in different sections of the United 

States, 1850-1920 3 

2. Quantity of merchantable southern pine timber, by States, 1920 6 

3. Quantity of lumber produced in the United States, and the quantity 

and proportion of southern pine lumber, 1909-1920 6 

4. Total investment and earnings as reported by 143 southern pine lum- 

ber companies, by territorial groups, 1917 and 1918 22 

5. High and low percentage rates of earnings on investment as reported 

by 143 southern pine lumber companies, by territorial groups, 1917 

and 1918 23 

6. Investment and earnings of 57 southern pine lumber companies as 

reported and after revision for appreciation in investment and costs, 

1917 and 1918 24 

7. Percentages of production and investment, and rates of return as 

reported by 57 southern pine lumber companies and as revised by 

the Commission, by profit groups, 1917 and 1918 25 

8. Comparison of rates of earnings on entire investment as reported ' 

by the companies and as revised by the Commission, 1917 and 1918_ 26 

9. Percentages of production and investment and rates of return, as re- 

ported and as revised for 143 southern pine lumber companies, 

by profit groups, 1917 and 1918 28 

10. Rate of return for 143 southern pine lumber companies, as revised by 

the Commission, by investment groups, 1917 and 1918 29 

11. Percentage decrease in production and sales footages for 1918, com- 

pared with 1917, for 143 southern pine lumber companies, by 
groups, based on 1917 investment, as revised by the Commission 30 

12. Percentages of total number of companies, total sales footage, total 

investment, and total earnings for 143 southern pine lumber com- 
panies, as revised by the Commission, grouped according to quan- 
tity of lumber sold, 1917 and 1918 31 

13. Average sales footages, average investments, and earnings per 

thousand feet sold, and rates of return on investment for 143 
southern pine lumber companies, as revised by the Commission, 
grouped according to quantity sold, 1917 and 1918 32 

14. Investment per thousand feet board measure of lumber produced, as 

revised by the Commission, for 146 southern pine lumber companies 
in 1917, classified according to life of operations based on timber 
owned and stumpage cut, by territorial groups 34 

15. Investment and earnings per thousand fe,et and rates of return on in- 

vestment in 1917 for 146 southern pine lumber companies, as revised 
by the Commission, classified according to life of operations based 
on timber owned and stumpage cut, by territorial groups 36 

16. Total production of southern pine lumber and quantity and percent- 

age of total covered in costs, by territorial groups, 1917 and 1918__ 38 

17. Quantities of lumber sold by 205 southern pine lumber companies, by 

territorial groups, 1917 and 1918 39 

18. Average production per company for 205 southern pine lumber com- 

panies, by States and groups of States, 1917 and 1918 40 

19. Average cost of sales, sales realization, and earnings per thousand 

feet, as reported by 205 southern pine lumber companies, by terri- 
torial groups, 1917 and 191S 40 



VI CONTENTS. 

20. High and low cost of sales, sales realization, net earnings on lumber, 

earnings from other sources, and total earnings per thousand feet 
board measure, as reported by 205 southern pine lumber companies, 
by territorial groups, 1917 and 1918 42 

21. Costs and earnings per thousand feet as reported by 205 southern pine 

lumber companies, according to quantity sold and by territorial 
groups, 1917 and 1918 43 

22. Average cost per thousand feet of producing and selling southern pine 

(mill run) lumber and timbers, as reported by 205 southern pine 
lumber companies, by territorial groups, 1917 and 1918 45 

23. High and low average costs per thousand feet to produce and sell 

southern pine lumber as reported by 205 southern pine lumber com- 
panies, by territorial groups, 1917 and 1918 46 

24. Proportion of production falling in specified ranges of net cost to 

produce and sell as reported by 205 southern pine lumber com- 
panies, 1917 and 1918 52 

25. Proportion of production falling in specified ranges of stumpage cost 

as reported by 205 southern pine lumber companies, 1917 and 1918_ 52 

26. Proportion of production falling in specified ranges of logging costs 

as reported by 205 southern pine lumber companies, 1917 and 1918- 53 

27. Proportion of production falling in specified ranges of manufacturing 

costs as reported by 205 southern pine lumber companies, 1917 and 

1918 54 

28. Proportion of production falling in specified ranges of general and 

administrative, shipping, and selling costs combined, as reported 

by 205 southern pine lumber companies, 1917 and 1918 55 

29. Revision for appreciation per thousand feet in stumpage charged to 

costs, 143 southern pine lumber companies, 1917 and 1918 57 

30. Average cost of sales, sales realization, and profits per thousand feet 

before and after revision for appreciation in stumpage charged co 
costs, 143 southern pine lumber companies, 1917 and 1918 58 

31. Costs and earnings per thousand feet, as revised by the Commission, 

for 143 southern pine lumber companies, by territorial groups and 
quantity sold, 1917 and 1918__ 59 

32. Proportion of production falling in specified ranges of stumpage cost, 

as reported by 143 southern pine lumber companies and as revised 

by the Commission, 1917 and 1918 60 

33. Average cost of sales, sales realization, and profit per thousand feet, 

as reported by 143 southern pine lumber companies and as revised 

by the Commission, by territorial groups, 1917 and 1918 61 

34. Average cost per thousand feet of producing and selling southern pine 

(mill run) lumber, as reported by 143 companies and as revised by 
the Commission, by territorial groups, 1917 and 1918 63 

35. Production, investment, earnings, and rates of return on investment, 

as reported by 143 southern pine lumber companies, grouped by 
States, 1917 and 1918 71 

36. Investments, earnings, and rates of return on investments before and 

after revisions for appreciation in timber investment and in lumber 
costs of 143 southern pine lumber companies, 1917 and 1918 73 

37. Total investment and earnings as reported by southern pine lumber 

companies, by territorial groups, 1917 and 1918 74 

38. Average cost of sales, sales realization, and earnings from lumber and 

other sources as reported by' 205 southern pine lumber companies, 

1917 and 1918 75 

39. Costs, by operations, as reported by 205 southern pine lumber com- 

panies, 1917 and 1918 77 

40. Costs, by operations, per thousand feet, as reported by 205 southern 

pine lumber companies, arranged from low to' high on net cost to 
produce and sell in 1918 78 

41. Costs, sales realization, and profits as reported by 205 southern pine 

lumber companies, grouped according to footages sold, for 1917 and 

1918 81 

42. Cost of sales, sales realization, profit on lumber, and profit from all 

sources per thousand feet as reported by 205 southern pine lumber 
companies, arranged from low to high on basis of profit on lumber, 
and rates of return on investment for 156 companies for 1917 84 



CONTENTS. VII 

Page. 

43. Cost of sales, sales realization, profit on lumber, and profit from all 

sources per thousand feet as reported by 205 southern pine lumber 
companies, arranged from low to high on basis of profit on lumber, 
and rates of return on investment for 144 companies for 1918 87 

44. Average cost of sales, sales realization, and earnings from lumber and 

other sources as reported by 143 southern pine lumber companies, 

and as revised by the Commission, 1917 and 1918 90 

45. Costs, by operations, as reported by 143 southern pine lumber com- 

panies, 1917 and 1918 91 

46. Costs and earnings per thousand feet as reported by 143 southern pine 

lumber companies, by territorial groups and quantities sold, 1917 

and 1918 92 

47. Simple average monthly lumber prices per thousand feet, f. o. b. mill, 

for specified grades and sizes, January, 1917, to December, 1921 93 

CHARTS. 

Facing page. 

1. Percentage of lumber cut by groups of States 4 

2. Comparison of changes in the principal elements of cost per thousand 

feet board measure by specified cost groups for 205 southern pine 
lumber companies, 1917 and 1918 52 

3. Cost to produce and sell southern pine lumber, per 1,000 feet (mill 

run), in 1918 56 

4. Average monthly lumber prices (f. o. b. mill) per 1,000 feet board 

measure, for specified sizes and grades from January, 1917, to De- 
cember, 1921, inclusive 68 

EXHIBITS. 

Page. 

1. Production, investment, earnings, and rates of return on investment 

for 143 southern pine lumber companies, grouped by States, 1917 

and 1918 71 

2. Investments, earnings, and rates of return on in\estment for 143 

southern pine lumber companies before and after revision for ap- 
preciation of stumpage in investment and costs, 1917 and 1918 73 

3. Total investment and earnings as reported by southern pine lumber 

companies, by territorial groups, 1917 and 1918 74 

4. Average cost of sales, sales realization, and earnings as reported by 

205 southern pine lumber companies, 1917 and 1918 74 

5. Costs by operations, as reported by 205 southern pine lumber com- 

panies, 1917 and 1918 76 

6. Net cost to produce and sell, by operations, as reported by 205 south- 

ern pine lumber companies for 1918 78 

7. Costs, prices, and profits as reported by 205 southern pine lumber 

companies grouped according to footages sold for 1917 and 1918 81 

8. Costs, sales realization, and profits as reported by individual com- 

panies, 1917 and 1918 83 

9. Average cost of sales, sales realization, and earnings of 143 southern 

pine lumber companies, 1917 and 1918 89 

10. Costs, by operations, as reported by 143 southern pine lumber com- 

panies, 1917 and 1918 91 

11. Costs and earnings per thousand feet as reported by 143 southern 

pine lumber companies by territorial groups and quantities sold, 

1917 and 1918 92 

12. Wholesale prices of lumber by months, January, 1917, to December, 

1921, inclusive 93 



ACKNOWLEDGMENT. 



The Commission desires to make special acknowledgment of the 
valuable services rendered by Mr. John W. Adams in the prepara- 
tion of this report. Valuable assistance was also rendered by Messrs. 
.Lawrence B. Anderson, Calvin C. Davis, Albert A. Hartley, and 
John S. Biggs. 



VIII 



LETTER OF SUBMITTAL. 



Federal Trade Commission, 

Washington, May 1, 1922. 

To the Congress of the United States: 

The Federal Trade Commission submits herewith a report on 
costs, prices, and profits of the southern pine lumber industry for 
the years 1917 and 1918. Most of the information contained in this 
report was secured pursuant to the direction of the President for the 
use of the War Industries Board in its regulation of lumber prices 
during those years. 

The principal facts developed from the Commission's study of the 
southern pine lumber industry, chiefly based upon data furnished by 
representative companies operating in the States of Virginia, North 
and South Carolina, Georgia, Florida, Alabama, Mississippi, Louis- 
iana, Texas, Oklahoma, and Arkansas, may be stated as follows : 

1. The accounting methods of southern pine manufacturers, while 
sometimes well devised, frequently do not enable them to determine 
accurately their costs of producing lumber, and in many instances 
result in obviously inflated costs. Reports submitted to the Com- 
mission show that many companies included the expenses of farm, 
turpentine, box, and other enterprises with the cost of their lumber 
operations, while other manufacturers inflated their costs by the 
inclusion of interest and a profit on stumpage in their cost of pro- 
ducing lumber. In some cases stumpage was charged into costs 
at such a high figure that the entire timber account was written off 
long before the end of the cut, while the remaining timber was 
charged into cost during 1917 and 1918 at the then estimated current 
market value. 

2. The average rate of earnings on the entire business, as re- 
ported by 143 identical companies, was 9 per cent in 1917 and almost 
8-J per cent in 1918. There was a wide variation in the reported 
rates of earnings for individual companies. In 1917 the reported 
rates of earnings ranged from a loss of almost 3 per cent to a profit 
of a little over 52 per cent, while in 1918 the range was from a loss 
of 13 per cent to a gain of nearly 52 per cent. 

3. The revision of the returns of these 143 companies by the elim- 
ination of stumpage appreciation from investments and costs in- 
creased their average rate of earnings on total investment from 
about 9 per cent to about 12 per cent in 1917 and from almost 8^ per 
cent to about 11 per cent in 1918. 

4. The total investment in the lumber business compared with the 
annual output varied greatly for different companies on account of 
differences in the supply of standing timber owned. Consequently 
companies owning a timber supply sufficient to last for short periods 
only generally received larger rates of return on their investment 



IX 



X COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

than those owning timber supplies sufficient to last a long time. In 

1917, for example, the average revised rate of return on investment 
for 146 companies was a little less than 12 per cent, while the rates of 
return for companies grouped according to the period of timber 
supply were as follows: Five years or less, not quite 15 per cent; 6 to 
10 years, a little over 12 per cent; 11 to 15 years, nearly 8 per cent; 
and over 15 years, 9J per cent. In other words, the companies not 
burdened with a relatively large timber supply were more profitable. 

5. Costs, sales realization, and earnings data which are presented 
for 205 identical companies producing about 54 per cent of the total 
output of southern pine for 1917 and almost 57 per cent in 1918 
show, according to the companies' own reports, the following re- 
sults : The average cost of sales was $16.73 per thousand feet in 1917 
and $22.44 per thousand feet in 1918, an increase of approximately 
34 per cent; the average sales realization was $20.77 per thousand 
feet in 1917 and $26.65 in 1918, a gain of almost 28 per cent; and 
the profit per thousand feet was $4.04 in 1917 and $4.21 for 1918, an 
increase of only slightly more than 4 per cent. 

6. There was a wide range in the reported costs, sales realization, 
and earnings per thousand feet for both years. In 1918, for example, 
individual costs, as reported by the 205 companies, ranged from $15.63 
to $37.12 per thousand feet; the average sales realization for differ- 
ent companies ranged from $18.81 to $36.28 per thousand feet; while 

* the net earnings for individual manufacturers ranged from a loss 
of $4.85 to a profit of $13.79 per thousand feet. 

7. The southern pine lumber industry was under increasingly 
strict governmental control of prices from July, 1917, to the end of 

1918, and throughout this period the increase in prices practically 
paralleled increasing costs. Following the termination of govern- 
mental price control the prices of southern pine lumber advanced 
rapidly to unprecedented levels during the latter part of 1919 and 
early 1920. These high prices gave rise to a " buyers' strike " and a 
rapid decline in prices, which began in the spring of 1920 and con- 
tinued through the middle of 1921, when the prices of many grades 
reached the price levels prevailing in the early months of 1917. 

In 1920, during this period of abnormally high prices, the Federal 
Trade Commission, in accordance with its statutory powers, and 
with the aid of a special appropriation by Congress, initiated plans 
for the collection and dissemination of information regarding costs, 
prices, and profits in basic industries, with a view to improving busi- 
ness conditions. With respect to the lumber industry the Commis- 
sion received active cooperation from representative companies in 
perfecting its plans, but obstacles created by judicial proceedings in 
another industry made it advisable to postpone this work. 
Respectfully, 

Nelson B. Gaskill, Chairman. 

Victor Murdock. 

John F. Nugent. 

Huston Thompson. 



SUMMARY. 



This report presents the costs, prices, and profits of a representa- 
tive group of southern pine lumber manufacturers, covering about 55 
per cent of the production of the 11 southern pine States for the two 
war years 1917 and 1918, when the production, distribution and 
prices of lumber were under increasingly strict regulation by the War 
Industries Board. During this period of price regulation the Com- 
mission acted as a fact-finding agency in securing and compiling 
southern pine lumber cost data, which were used by the War Indus- 
tries Board in connection with its price-fixing activities, but the 
Commission was not responsible for the actual fixing of lumber 
prices. 

From July, 1917, to October, 1918, monthly cost statements cover- 
ing a varying number of companies were secured and compiled for 
the War Industries Board. At the end of 1918 the Commission se- 
cured, by schedule, annual cost and profit and loss statements for the 
business years 1917 and 1918, and the balance sheets for the close of 
the business years 1916, 1917, and 1918 from the companies previously 
reporting monthly costs. These schedules were certified as correct by 
officials of the companies and were subject to verification by agents of 
the Commission. In all, 205 identical companies reported adequate 
data on costs for both 1917 and 1918 and 143 of these companies also 
reported certain financial data for both years. These statements, 
which cover somewhat more than the period of Government price 
fixing, serve as the basis for the present report. 

COST -ACCOUNTING METHODS. 

At the beginning of its work the Commission found a wide di- 
versity in the types of records kept, ranging from the simplest book- 
keeping to highly developed cost-accounting systems. Opinions as 
to what constituted lumber costs were almost as diverse as the rec- 
ords in use. A few of the companies had excellent accounting sys- 
tems, but many had only inadequate systems or none at all. Con- 
sequently there was, and undoubtedly still is, a great deal of room 
for improvement in the accounting systems and methods in use. 

Considerable work has been done by the various southern pine lum- 
ber manufacturers' associations in the study of costs reported to the 
associations and compiled by them for the use of their members. 
In order to make their reports more comparable, the associations 
have recommended the adoption of certain uniform methods of cost 
keeping. Much of this work had an educational value in bringing 
about a clearer understanding of the need of accurate cost-accounting 
systems, but along with this beneficial work certain methods that are 
not in accordance with the best cost-accounting practices, such as 
charging stumpage into costs at the estimated current market value 

XI 



XII COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

and charging interest on investment to cost, have in some instances 
been advocated by certain individuals active in association work, if 
not officially recommended by the associations. The recommendation 
of such practices appears to have had for its object the adoption of 
such methods as would yield greater uniformity in the costs of all 
companies, as shown in their reports submitted to the associations 
rather than the determination of the actual costs for individual com- 
panies. From an accounting viewpoint stumpage should be charged 
into costs at current market value only in case that price was 
paid for it, while interest is not properly an item of direct manu- 
facturing cost. 

Charging stumpage into costs at current market values, or at 
figures higher than cost as shown by the books of the companies, 
was found to be quite prevalent. The practice appears to have been 
one that gradually developed, partly because individuals engaged in 
the industry lacked accurate accounting knowledge and partly be- 
cause it has been advocated strongly by some mill owners as a basis 
for price determination. The practice, however, was carried to such 
a point by some companies that the entire timber account was written 
off before the end of the cut, and in some cases written back again, 
and the process was being repeated. 

Some companies failed to include any depreciation whatever in 
costs, others made a regular charge, while still others made the 
charge at irregular intervals. In many cases the size of the charge 
was contingent upon the profits of the business for the year. In 
years of large earnings large charges would be made, while in lean 
years only small charges or even none at all would appear on the 
books. 

Many companies had farms, turpentine, and by-product operations 
of various sorts, but kept no by-product costs segregated from their 
lumber costs. Failure to segregate such operations from the manu- 
facture of lumber in their accounting made the accurate determina- 
tion of lumber costs difficult in many cases and in some cases practi- 
cally impossible. 

RATES OF RETURN ON INVESTMENT. 

The rates of return on investment were computed for 143 com- 
panies for which the reports were sufficiently complete. These re- 
ported rates averaged 9 per cent in 1917 and almost 8J per cent in 1918. 
The average rates of earnings on the basis of the revision by the 
Commission were nearly 12 per cent in 1917 and 11 per cent in 
1918. Total earnings as used in relation to total investment were 
the total revised earnings from lumber, lumber by-products, and 
outside investments before the deduction of interest and income 
and excess profits taxes. The rates of earnings, based on the re- 
vised reports of the companies, ranged for individual companies from 
a loss of almost 3 per cent to a profit of a little over 64 per cent on 
the total investment in 1917 and from a loss of 13 per cent to a profit 
of almost 52 per cent in 1918. 

In both years the bulk of the production was manufactured by 
companies making, both before and after revision, only moderate 
rates of return on their investment. In 1917, after revision, 5 of the 



SUMMARY. XI IT 

143 companies had losses averaging a little over 1 per cent, and in 1918, 
15 had losses averaging almost 2 per cent on their entire investment. 
In 1917, 63 companies, and in 1918, 74 companies, including those 
showing losses, realized earnings of less than 10 per cent on their 
total investment. These companies manufactured 41 per cent of the 
lumber produced by the 143 companies in 1917 and nearly 44 per 
cent in 1918. In 1917, 110 companies, whose production represented 
76 per cent of that covered, had earnings of 20 per cent or less on 
their total investment, and in 1918, 119 companies, again representing 
70 per cent of the total production covered, realized earnings of 
less than 20 per cent. In 1918 the bulk of the remaining 24 per 
cent of the production covered was manufactured by companies 
realizing between 20 and 30 per cent on their entire investment, while 
in 1917 about half of the remaining 24 per cent of the production 
was produced by companies earning from 20 to 30 per cent and 
the balance by companies realizing more than 30 per cent. 

EFFECT OF APPRECIATION ON COSTS, INVESTMENTS, AND PROFITS. 

Fifty-seven of the 143 companies returning cost, profit and loss 
and balance sheet data reported stumpage in investments, or in 
costs, or in both investments and costs, in one or both years, at 
more than it cost them, i. e.. at appreciated values. For most com- 
panies these appreciated values appeared in both investments and 
costs, but a few reported stumpage charged to costs at figures dif- 
fering from those shown in their balance sheets. The average over- 
charges in costs amounted to $1.85 per thousand feet board measure 
in 1917 and $2.13 in 1918, representing 41 per cent of the charge for 
stumpage in costs for 1917 and 44 per cent in 1918. Forty-two of the 
57 companies showed appreciated values in both costs and invest- 
ments in both years. For these companies the average overcharge 
amounted to $2.17 per thousand, or about 46 per cent, of the amount 
charged for stumpage in 1917, and $2.45, or almost 49 per cent, in 
1918. 

Deducting appreciation from costs and adding it back to earn- 
ings increased the total profits for the 57 companies by about 31 
per cent in both years. Deducting appreciation from investment 
reduced the investments by about 21 per cent in 1917 and 1918. As 
the result of this revision of investments and earnings the net return 
on the total investment was increased from about 10 per cent to 
almost 16 per cent in 1917 and from nearly 9 per cent to about 14 per 
cent in 1918. For the 42 companies showing appreciation in both 
investments and costs in both years, the changes in rates of return 
resulting from revision were from about 10 to a little over 17 per 
cent in 1917 and from slightly more than 9 to almost 16 per cent in 
1918. The remaining 86 companies showed no appreciation in their 
reports ; however, it appears probable that many of these companies 
had appreciated their stumpage. When the results for the 57 com- 
panies whose investments and earnings as revised were combined 
with those for the 86 companies, the rates of return on investment for 
all companies were increased in 1917 from 9 per cent before adjust- 
ment to about 12 per cent after adjustment, and in 1918 from 8^ per 
cent to about 11 per cent. 



XIV COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

EARNINGS GROUPED ACCORDING TO INVESTMENT. 

A study of the revised investments and earnings of 143 com- 
panies grouped according to their respective capital investments 
showed that in 1917 the highest average rate of return on investment, 
18 per cent, was realized by companies having investments of less 
than $250,000; while in 1918 the highest rate, about 12.5 per cent, 
was shown for companies having investments ranging from $2,500,000 
to $5,000,000. In both years the smallest reported rates of return, 
amounting to about 6 per cent in 1917 and 8 per cent in 1918, were 
realized by the largest companies, reporting investments amounting 
to more than $10,000,000 each. 

EARNINGS GROUPED ACCORDING TO QUANTITY SOLD. 

When the 143 companies are grouped according to volume of 
sales the results show that the companies having the smallest 
sales footages had the least profit per thousand feet of lumber 
sold in both years, the revised rates of return on investment 
for the smaller companies were somewhat lower than those 
of their larger competitors in 1917, and they were much lower 
in 1918. The group having the highest rate of return, how- 
ever, was one of the intermediate groups in each year. In 1917 
the smallest companies, selling not to exceed 12,500,000 feet each, 
had an average profit of about 9 per cent on their total investment; 
companies selling from 25,000,000 to 50,000,000 feet realized over 13 
per cent, the highest rate, while the largest companies realized 
about 11 per cent. In 1918 there was a decrease of 12 per cent in 
production as compared with 1917, which fell most heavily on the 
smallest companies. Consequently the smallest companies, having 
sales not exceeding 12,500,000 feet for the year, had earnings aver- 
aging slightly less than 6 per cent; those reporting sales for the 
year ranging from 50,000,000 to 100,000,000 feet showed the high- 
est earnings, averaging over 12 per cent, and the largest companies, 
selling over 100,000,000 feet, showed earnings averaging over 11 per 
cent on their total investments. 

INVESTMENT PER UNIT OF LUMBER PRODUCED. 

The amount of investment per thousand feet of lumber produced 
varies widely with the quantity of standing timber owned. Com- 
panies having timber reserves to last only a few years generally 
show a much smaller investment per thousand feet produced than 
those having a large timber supply. As shown by the revised re- 
ports of 146 companies, the average total investment of all companies 
amounted to $53.53 per thousand feet produced in 1917. This re- 
vised average investment includes : Land and timber, $29.21, or about 
55 per cent; plant and equipment, $11.04, or about 20 per cent; and 
other investments, consisting of outside investments and undis- 
tributed surplus, $13.28, or approximately 25 per cent. 

Seventy-three of the 146 companies having timber supplies in 
1917 sufficient to last five years or less had an average total in- 
vestment per thousand feet of lumber produced of $36.94, of 



SUMMARY. XV 

which $16.30, or about 44 per cent, was land and timber; 46 
companies having timber supplies large enough to last over 5 
but not in excess of 10 years had a total investment of $56.38 
per thousand feet, of which $30.06, or 53 per cent, was land and 
timber; 18 companies, with timber supplies which would last be- 
tween 11 and 15 years, had a total investment of $79.87 per thousand 
feet, of which $50.14, or 63 per cent, was land and timber; and 9 
companies, with timber supplies to last over 15 years, had a total 
investment of $73.93, of which $53.18, or 72 per cent, was land and 
timber. The proportion of total investment represented by land 
and timber increased with timber supply from about 44 per cent 
of the total for companies having less than 5 years' timber supply to 
72 per cent for companies having over 15 years' supply. Plant and 
equipment decreased in importance as timber supply increased; in 
1917, for example, the range was from 26 per cent for companies 
owning the smallest supplies to 16 per cent for those owning the 
largest supplies. All other investment, including outside invest- 
ments and current assets, represented from 30 per cent for the 
companies having the smallest supply to about 12 per cent for those 
having the largest supply. 

EARNINGS GROUPED ACCORDING TO DURATION OF OPERATIONS. 

Since the total investment per unit of lumber produced varies 
so widely with the quantity of timber and timberlands owned, it 
follows that the companies having relatively small timber reserves 
in relation to their annual production show higher rates of earn- 
ings than companies owning relatively large timber supplies. A 
study of the results for 146 companies grouped according to the 
number of years that owned timber supplies would last, based on 
timber owned and stumpage cut for the year 1917, shows that 73 
of the 146 companies reporting timber supplies to last 5 years or 
less realized almost 15 per cent on their total investment; 46 com- 
panies reporting timber supplies to last 6 to 10 years realized earn- 
ings averaging a little over 12 per cent; 18 companies reporting 
timber supplies to last 11 to 15 years realized earnings averaging 
not quite 8 per cent ; and 9 companies reporting timber supplies to 
last over 15 years realized earnings averaging 9J per cent. 

UNIT COSTS, SALES REALIZATION, AND PROFITS. 

During 1917 and 1918 costs were steadily advancing. In the early 
part of 1917 prices advanced with considerable rapidity, until the 
first steps to regulate them were taken by the Government in the 
form of agreements with the manufacturers fixing prices at which 
cantonment stock would be furnished on Government orders. Later, 
in the spring and early summer of 1918 prices on civilian purchases 
were advancing more rapidly than prices on Government purchases, 
so that price regulation on the basis of production costs was ex- 
tended by the War Industries Board to cover civilian as well as 
Government purchases. 

In the presentation of unit costs, sales realization, and profits for 
1917 and 1918, results based on the reports of 205 companies are first 



XVI COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

considered. Their production represented about 54 per cent of total 
southern pine production for 1917, as reported by the United States 
Forest Service, for the 11 States in which the companies are located, 
and approximately 57 per cent for 1918. The quantity not covered in 
this report represents the production of a large number of small com- 
panies as well as some larger ones, whose records were such that they 
could not report the information requested or whose production in- 
cluded other species as well as pine. Only 143 of the 205 companies 
reported adequate investment data for both years, hence a second 
grouping of 143 companies for which complete cost and investment 
figures are available was also made. The reported results as to unit 
costs, prices, and profits for these 143 companies do not differ greatly 
from those of the larger group of 205 companies. These costs, how- 
ever, have been revised by the Commission, especially with a view to 
eliminating appreciation in stumpage. 

The reported cost of sales for the 205 companies was on the average 
about 34 per cent greater in 1918 than in 1917 ; sales realization was 
approximately 28 per cent higher and reported net earnings per 
1,000 feet on lumber sold were slightly more than 4 per cent larger 
m 1918 than in 1917. Under Government regulation prices advanced 
along with costs in such a manner that the reported profit per 1,000 
feet of lumber sold was only slightly greater in 1918 than in 1917. 

The reported cost of sales varies widely for different companies, 
the average of $16.73 in 1917 including costs for individual com- 
panies ranging from $12.32 to $23.45 per 1,000 feet board measure; 
while in 1918 the average reported cost of $22.44 included results for 
individual companies ranging from $15.63 to $37.12 per 1,000 feet. 

The sales realization likewise showed considerable variation for 
different companies, the average of $20.77 per 1,000 feet in 1917 in- 
cluding results for individual companies ranging from $15.10 to 
$25.67, and the average for 1918 of $26.65 including figures for in- 
dividual companies ranging from $18.81 to $36.28 per 1,000 feet. 

The reported net earnings from lumber also showed similar varia- 
tions from company to company, the average being $4.04 per 1,000 
feet in 1917, with individual company earnings ranging from a loss 
of $4.35 to a profit of $9.80 per 1,000 feet. The average net earnings 
were $4.21 for 1918 including results for individual companies rang- 
ing from a loss of $4.85 to a profit of $13.79 per 1,000. 

The lowest reported unit costs and the highest reported unit profits 
were shown by the companies located in the States of Alabama, 
Mississippi, Louisiana, Texas, Arkansas, and Oklahoma, called for 
convenience in the report the Gulf States group. The highest costs 
and the lowest earnings per 1,000 were reported by companies located 
in the States of Virginia, North Carolina, and South Carolina. In 
1917 the average reported net earnings on lumber for the 156 com- 
panies located in the Gulf States group amounted to $4.44 per 1,000 
feet of lumber sold, while the unit earnings of the 24 companies com- 
prising the Georgia-Florida group were $2.63 per 1,000 feet, and 
those of the 25 companies included in the Virginia- Carolina group 
were $1.38 per 1,000 feet. In 1918 the average reported net profits 
realized by the three groups were as follows : Gulf States group, 
$4.62; Georgia-Florida group, $2.74; and the Virginia-Carolina 
group, $0.95. 



SUMMARY. XVII 

UNIT COSTS AND PROFITS ACCORDING TO QUANTITIES SOLD. 

Companies producing less than 25,000,000 feet board measure in 
each year reported higher costs per thousand and a somewhat lower 
sales realization per thousand feet than their larger competitors. 
Consequently their reported profits per thousand feet were materi- 
ally less than those of the larger companies. 

In 1917, 33 small companies, reporting annual sales of less than 
12,500,000 feet each and representing 4 per cent of the total sales, 
reported an average cost of sales of $17.16 per thousand feet and a 
net profit of $2.75 per thousand, while 8 large companies reporting 
annual sales of over 100,000,000 feet each, including 18 per cent of 
the total sales, produced at an average cost of $16.28 per thousand 
feet and realized a net profit of $4.59 per thousand. In 1918, 54 
companies sold less than 12,500,000 feet per company. The sales of 
these 54 companies represented but 8 per cent of the total and were 
produced at an average reported cost of $24.66, and yielded a net 
profit of $1.32 per thousand. Six companies sold in excess of 100,- 
000,000 feet each, and their combined sales represented 15 per cent 
of the total sales covered. These six companies produced at an 
average reported cost of sales of $21.73 and realized a net profit on 
lumber of $5.35 per thousand. 

PRICES SINCE THE BEGINNING OF THE WAR. 

From July, 1917, to the end of 1918 the southern pine lumber in- 
dustry was under increasingly strict Governmental regulation as to 
prices and distribution. In the latter part of this period prices were 
fixed by the War Industries Board on the basis of costs. It was not 
the policy of the War Industries Board to stimulate increased pro- 
duction by allowing high prices, hence prices were advanced in 
amount nearly parallel with increasing costs. This resulted in profits 
realized being nearly the same in 1918 as in 1917. 

Following the termination of Government price control, prices ad- 
vanced rapidly to unprecedented levels during the later months of 
1919 and the early months of 1920. This period of highest prices was 
undoubtedly a period of very large profits to manufacturers of south- 
ern pine lumber, and production was greatly stimulated. New mills, 
mostly small, began operations in large numbers throughout the 
South. Consequently, when curtailment of buying came in the spring 
and summer of 1920, there was excess producing capacity in operation. 
Stocks accumulated rapidly and soon had to be moved at greatly re- 
duced prices, so that the decrease in prices from their 1920 peak was 
even more rapid than their advance in 1919. 

During the last half of 1921 prices for many items, particularly of 
lower grades, reached levels approximating those in effect at the be- 
ginning of 1917. The higher grades, for which there was a greater 
demand and of which there were smaller stocks accumulated during 
and since the war, suffered large decreases in price but did not fall to 
pre-war levels. Various factors have prevented the public from 
realizing the full benefit of decreased prices at the mill, among which 
105332°— 22 2 



XVIII COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

may be mentioned the tendency of retailers to maintain high prices, 
at least until their high-cost stock is disposed of, and the high freight 
rates prevailing on lumber. 

PROPOSED CURRENT REPORTS. 

The foregoing statement regarding the conditions in the southern 
pine lumber industry since the war is necessarily confined to informa- 
tion obtained from trade papers and other secondary sources, because 
the Commission, as explained below, was prevented from obtaining 
adequate data from the lumber companies themselves. Realizing the 
great importance of having more definite information, during the 
early part of 1920 the Commission decided to resume the collection of 
data on production, shipments, stocks, cost of production, and sales 
realization for several basic industries including the lumber industry. 
Following the temporary injunction granted in the Maynard case, in 
a suit by a coal company contesting the Commission's power to require 
such reports from the coal industry, consideration was given to the 
advisability of requesting lumber manufacturers to submit voluntary 
reports. 

In order to devise a plan whereby such current information as 
costs, production, and stocks could be secured and promptly made 
available to both the public and the industry, the Commission held 
several conferences with representatives from the southern pine 
and certain other important lumber-producing regions. The lumber 
representatives attending these conferences promised to cooperate 
with the Commission, and the representatives of the various asso- 
ciations in the southern pine region took a very active part in the 
preparation of schedules to be used for the collection of the neces- 
sary information. The way seemed open at first for continuing 
these basic industry reports on a voluntary basis. On account, how- 
ever, of the unsatisfactory results from the system of voluntary 
reporting in the coal and steel industries, the Commission finally 
decided to postpone such work in the lumber industry until its power 
to require such reports was finally determined by the courts. Con- 
sequently the Commission is unable to include in this report the dis- 
cussion of any cost or profits data more recent than that of the year 
1918. Information of this character covering 1919 to 1921, inclusive, 
would undoubtedly be of great interest and value both to the indus- 
try and the public, as the lumber business, after a period of feverish 
activity during 1919 and the early months of 1920, experienced a 
period of depression in 1921, during which it has been claimed that 
much lumber was being sold by manufacturers at less than the cost 
of production, but no public agency has been in a position to answer 
the consumer's question as to whether the claim was well founded. 

The Commission believes that it would be to the benefit of the 
lumber industry as well as of value to the public to have such work 
resumed, but that apparently must await a dismissal of the present 
judicial injunction. 



WAR-TIME COSTS AND PROFITS OF SOUTHERN 
PINE LUMBER COMPANIES. 



Chapter I. 
GENERAL SURVEY. 

Section 1. Origin and scope of the Commission's cost work. 

Origin of the investigation. — Almost immediately after the 
United States entered the World War it was considered necessary 
to obtain accurate data regarding the cost of producing lumber, and 
the Commission was directed by the President to secure such infor- 
mation. At first the object was to determine the cost of producing 
cantonment stock and ship timbers, but later the cost work was 
extended to furnish cost data for the use of the War Industries 
Board in connection with price fixing. While this work was essen- 
tially a part of the war work of the Commission, a report covering 
the cost of production, prices, investment, and earnings for the 
southern pine lumber industry during 1917 and 1918 is published, 
because it is of general interest and value both to the industry and 
to the public, as reflecting conditions in the industry during the two 
war years, during which the production and distribution of lumber 
were under increasingly strict governmental regulation. 

Scope of the Commission's war work. — Throughout the war 
period the work of the Commission in connection with the lumber 
industry was practically limited to the determination of the cost 
of producing southern pine and Douglas fir lumber, and its activi- 
ties did not at any time include the fixing of lumber prices. The 
Commission transmitted to the War Industries Board cost reports 
which were used by the price-fixing committee as a basis for deter- 
mining prices. In order to supply the maximum amount of infor- 
mation regarding the cost of producing lumber, the Commission not 
only furnished the costs of various companies, together with the 
averages for individual States and groups of States, but also reported 
the maximum costs for various proportions of the output, so that the 
price-fixing committee might have at its disposal information upon 
which to establish prices adequate to yield whatever profit it might 
allow on whatever proportion of the production was considered 
necessary. 

Source of data. — At first the information was secured directly 
from the records of the companies by agents of the Commission, but 
later, when the work was greatly extended, it became impossible for 
the Commission's force to cover the field. Therefore this method of 
obtaining information was discontinued, and the plan was adopted of 
securing monthly cost statements on schedules filled out by the com- 
panies. These schedules were certified as correct by responsible offi- 



2 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

cers of the companies and were subject to verification by agents of the 
Commission. Later, at the end of 1918, and just about the time the 
price control of the War Industries Board was terminated, the Com- 
mission requested the companies previously furnishing monthly costs 
to furnish complete annual cost and profit and loss statements for the 
business years 1917 and 1918 and balance sheets for the close of the 
business years 1916, 1917, and 1918. These statements, which serve 
as the basis of this report, were secured by schedule, subject to verifi- 
cation by agents of the Commission exactly as the monthly costs had 
previously been secured. It is, therefore, to be noted that the results 
presented in this report are not actually based on the monthly reports 
summarized for the War Industries Board, but are based on annual 
statements covering somewhat more than the period previously 
covered by the monthly cost reports. 

The verification of the annual statements by agents of the Com- 
mission was done under considerable stress and pressure for time; 
hence detailed audits to verify the data reported in the schedules were 
undertaken only in cases of apparent disagreement between the costs 
and financial data reported and the books of the companies. Conse- 
quently the costs, investments, and earnings presented in this report 
are practically those reported by the companies. In fact, the only 
important revision made by the Commission has been to eliminate 
appreciated stump age values from investments and costs where 
shown by the reports or by subsequent audits of the Commission's 
agents. 

Scope of the report. — This report covers the costs of producing 
lumber and earnings per thousand feet board measure for 205 identi- 
cal companies manufacturing long-leaf and short-leaf southern pine 
lumber for 1917 and 1918 and the investment and earnings on invest- 
ment for 143 of the 205 companies in 1917 and 1918. These companies 
operated in the following 11 States, viz, Oklahoma, Texas, Arkansas, 
Louisiana, Mississippi, Alabama, Georgia, Florida, South Carolina, 
North Carolina, and Virginia. The report also reviews briefly the 
market price movements for certain specified sizes and grades of 
southern pine lumber by months during the period from January, 
1917, to December, 1921, inclusive. The prices discussed are com- 
piled from market reports published in the lumber trade journals. 

Section 2. Development of the lumber industry. 

Importance of the lumber industry. — The manufacture of lum- 
ber is one of the oldest industries of this country, but until recent 
years only the most meager consideration has been given to its his- 
tory and development. Prior to the Civil War lumber manufacture 
was, relatively speaking, a local industry and of little importance in 
interstate commerce. Since that time lumber has been distributed 
to points of consumption increasingly distant from its origin, and 
at the present time it is the largest single item of railway tonnage 
originating in the Pacific Northwest; while in the southern pine 
region it is excelled only by coal. 

The United States is the largest wood- consuming country in the 
world, and its annual production of lumber is several times larger 
than that of any other country. Originally the forest area of the 
United States was, according to the United States Forest Service, 



GENERAL SURVEY. 3 

about 822,000,000 acres, or almost 44 per cent of the total land area 
of the country. At the present time the forest area covers about 
463,000,000 acres, or about 56 per cent of the original forested area. 
According to the Forest Service, the original timber stand was 
about 5,200,000,000,000 feet board measure, of which about 2,215,- 
000,000,000 feet board measure, or about 43 per cent, still remains. 
The present supply consists of about 1,755,000,000,000 feet board 
measure, or 79 per cent, of softwoods and 460,000,000,000 feet board 
measure, or 21 per cent, of hardwood. Of the present total supply 
of softwoods about 15 per cent is southern pine, which, since 1909, 
has furnished about one-third of the total annual production of all 
kinds of lumber. 

Migration of the lumber industry. — Originally the timber areas 
of the United States were widely distributed throughout the country 
with the exception of the plains region. The history of the develop- 
ment of the lumber industry in the United States is the story of the 
migration of its largest center of production from one to another of 
the live great timber sections of the country. These five sections 
include the following areas : The northeastern section covers Maine, 
New Hampshire, Vermont, Massachusetts, Rhode Island, Connecti- 
cut, New York, New Jersey, Pennsylvania, Delaware, and Mary- 
land; the central section embraces West Virginia, Tennessee, Ken- 
tucky, Ohio, Indiana, Illinois, and Missouri; the southern is made 
up of Virginia, North and South Carolina, Georgia, Florida, Ala- 
bama, Mississippi, Louisiana, Arkansas, Oklahoma, and Texas; the 
Lake States region includes Michigan, Wisconsin, and Minnesota; 
while the western section comprises New Mexico, Arizona, Colorado, 
Utah, Wyoming, Montana, Idaho, Washington, Oregon, Nevada, 
and California. Although the production outside of these five tim- 
ber regions is insignificant, some lumber has been produced in every 
State in the Union. 

The following table, based upon statistics compiled by the United 
States Forest Service, shows the migration of the industry in the 
United States since 1850: 

Table 1. — Proportion of lumber produced in different sections of the United 

States, 1850-1920. 



Section. 


1850 


1860 


1870 


1880 


1890 


1899 


1909 


1918 


1919 


1920 


Northeastern 

Central 


Per 

cent. 

54.8 

18.6 

13.6 

6.3 

5.9 

.8 


Per 

cent. 
37.0 
21.1 
17.8 
13.6 
6.5 
4.0 


Per 

cent. 

37.8 

20.0 

9.4 

24.4 

4.9 

3.5 


Per 

cent. 

25.8 

18.4 

13.8 

34.7 

4.5 

2.8 


Per 

cent. 

19.8 

13.1 

20.3 

34.6 

9.6 

2.6 


Per 

cent. 

16.3 

16.1 

31.7 

24.9 

9.9 

1.1 


Per 
cent. 
11.7 
12.3 
44.9 
12.3 
18.4 
.4 


Per 

cent. 

7.4 

7.8 

43.2 

10.1 

31.3 

.2 


Per 

cent. 

7.5 

8.7 

46.6 

7.8 

29.2 

.2 


Per 

cent. 
6.5 
8.1 


Southern 


42.5 


Lake States 


7.1 


Western 


35.6 


All other 


.2 






Total 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 







In 1850 lumber manufacture was one of the leading industries in 
the northeastern section, which supplied over one-half of all of the 
lumber produced in the United States. Twenty years later, in 1870, 
the Northeastern States produced only three-eighths of the country's 
total output, while the production for the Lake States increased to 



4 " COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

practically one-fourth of the total for the United States. In 1880 
the Lake States were in the lead with 35 per cent of the country's 
total, while in 1899 the production in the Southern States exceeded 
that of any other section. In recent years the proportion of the 
total produced by the northeastern and lake regions has dwindled 
in importance to about 7 per cent each, while that for the southern 
region begins to show a tendency to decrease, and that of the western 
section is showing a marked tendency to increase. Since 1880 the 
production of the Western States has increased from 4.5 per cent 
to 35.6 per cent of the total. This section will be the jiext and last 
great producing area, as the dwindling southern pine and hardwood 
forests can not long continue to furnish as large a proportion of the 
total as at the present time. The relative importance of the produc- 
tion supplied by the different sections of the country are presented 
in graphic form in Chart 1, opposite. As the production of the 
South decreases with depletion of its forests, the country will be- 
come more and more dependent on the Pacific Northwest for its 
domestic lumber supply. Imports will also increase in importance 
as a source of construction lumber and exports will probably decline. 

Decrease in lumber consumption. — The per capita consumption 
of lumber in the United States has declined rapidly in recent years. 
In 1906, the year of maximum consumption, it was about 525 feet, 
while in 1919 it was only about 310 feet per capita. This decline 
was partly due to the substitution of other materials for lumber for 
many purposes for which there was formerly a large demand. Much 
of the diversion of the demand for lumber to other materials has 
either been due to the intrinsic superiority of such substitutes for the 
uses to which they have been devoted or because they were cheaper. 
The more important substitutions have been of structural iron, steel, 
concrete, brick, tile, and terra cotta for general structural purposes ; 
metal shingles, tile, slate, and composition materials for roofing; 
fiber for boxes and crates ; steel for railroad construction ; steel, con- 
crete, and wire for posts and fencing; cement and stone for paving 
and sidewalks ; and metal for cooperage, machine, and vehicle parts, 
interior trim, and ship construction. The United States Forest 
Service estimated in 1917 that for purposes for which lumber had 
previously been used substitutes of various sorts displaced at least 
8,090,000,000 feet board measure annually, which is equivalent to 
nearly 22 per cent of the country's average annual lumber production 
since 1909. 

Present and future timber supplies. — The United States Forest 
Service estimates that, notwithstanding the large substitutions of other 
materials for lumber, the present quantity of standing timber, includ- 
ing second growth, will last only about 60 years at the present rate of 
cutting. The United States Forest Service also estimates that timber 
is now being cut in the United States about four times as fast as it 
grows. 1 Consequently, unless a further marked reduction in the per 
capita consumption can be secured through a further substitution of 
other materials for uses now supplied by lumber, and unless there is 
more complete utilization of the timber cut, the present sources of 
lumber supply will be greatly depleted, or entirely consumed, before 



- U. S. Forest Service. " Timber Depletion, Lumber Prices, Lumber Exports, and Con- 
centration of Timber Ownership," 1920, p. 3. 






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GENERAL SURVEY. 5 

any policy of reforestation, however effective, can produce merchant- 
able timber in quantities to supply the demand. 

Other countries, with the exception of European and Asiatic Rus- 
sia, are in much the same position with respect to coniferous forests, 
which, because of the lightness, durability, and easy working quali- 
ties of such woods, furnish the main varieties of construction lumber. 
The United States is estimated to have, next to Russia, the largest 
area of standing timber of the Temperate Zone species in the world. 
It is therefore in a better position than most countries, provided 
proper steps are taken to conserve and reproduce its dwindling 
timber resources, to meet the real shortage of Temperate Zone forest 
products that is making itself felt throughout the world. Tropical 
countries have great untouched virgin forests, but they are mainly 
of heavy hardwoods that are difficult and expensive to log and manu- 
facture, and when manufactured, are far less suitable to general con- 
struction work than the coniferous species. 

Concentration of timber ownership. — In 1913 the Bureau of 
Corporations called attention to the growth in the concentration and 
control in the ownership of standing timber in the United States. 2 
In 1920 the United States Forest Service stated that in general the 
situation as to the ownership of standing timber had not changed 
materially from that shown in the report of the Bureau of Corpora- 
tions. According to the Forest Service, further increase in the con- 
centration of ownership of standing timber for investment or specu- 
lative purposes appears to have been checked by the heavy expenses 
for fire protection and timber taxes, and other expenses incident to 
carrying large timber supplies. 

At the present time the number of southern pine timber owners 
not operating sawmills is small, large sales of stumpage are few, and 
the available stumpage is rapidly becoming definitely related to 
manufacturing plants. The Forest Service estimates that the south- 
ern pine region contained about 139,000,000,000 feet of virgin pine 
in 1920, and that 5,401 sawmills were operating on this supply. This 
timber is being cut so rapidly that it is estimated in 20 years the 
remaining stand of virgin pine will be about 30,000,000,000 feet and 
that it will be controlled by 45 mills owned or controlled by a con- 
siderably smaller number of corporate interests. When the virgin 
timber is cut out, some of the larger mills cease operating and are 
replaced by smaller mills which operate on second growth and upon 
virgin timber that was too small to cut when the timberland was 
first logged, so that the number of small sawmills in the southern 
pine region is increasing rapidly. During 1919, under the stimulus 
of high prices, it is estimated that between 800 and 1,000 small sawmills 
began operations in the South. 3 

Section 3. Relative importance of southern pine. 

Southern pine standing timber. — It has been estimated by the 
Forest Service that the original stand of southern pine, including 
both long and short leaf, was approximately 650,000,000,000 feet, and 
of this total quantity there is still remaining about 258,000,000,000 

a The Lumber Industry, Part I, pp. 20-21. 

8 Report of the United States Forest Service on Timber Depletion, Lumber Prices, 
Lumber Exports, and Concentration of Timber Ownership, 1920, pp. 60-63. 



6 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



feet, including both virgin and second growth, or about 40 per cent 
of the estimated original stand. This quantity, as already stated, 
includes about 15 per cent of all the remaining softwood timber in 
the entire country. The States of Louisiana, Mississippi, Florida, 
and Texas contain about 59 per cent of the present quantity of stand- 
ing timber in the southern pine area. The following table shows the 
distribution by States as shown by the Forest Service : * 

Table 2. — Quantity of merchantable southern pine timber, by States, 1920. 



States. Quantity (feet). 


Per cent. 


States. 


Quantity (feet). 


Per cent. - 


Louisiana 


47, 348, 400, 000 
40, 476, 200, 000 
36, 429, 300, 000 
27, 524, 700, 000 
25, 316, 400, 000 
21, 807, 600, 000 
15, 743, 700, 000 


18.37 

15.71 

14.14 

10.68 

9.82 

8.46 

6.11 


South Carolina 

North Carolina 

Virginia 


13, 889, 800, 000 

15, 300, 800, 000 

8, 698, 000, 000 

4, 791, 400, 000 

364, 700 


5.39 


Mississippi 


5.94 


Florida 


3.38 


Texas 


Oklahoma 


1.86 


Alabama 


Missouri 


.14 




Total 




Arkansas 


257, 691, 000, 000 


100. 00 









According to the Forest Service, 54 per cent of the present total 
stand is old timber and the remainder, or 46 per cent, second growth. 
Of the present stand slightly more is represented by short-leaf than 
by long-leaf pine. The short-leaf pine occurs to a greater extent in 
the South Atlantic States and the long-leaf in the Gulf States. 

Production or southern pine lumber. — The following table shows 
the total lumber production in the United States, the production of 
southern pine, and the proportion which it represents of the total out- 
put 1909-1920 : 

Table 3. — Quantity of lumber produced in the United States, and the quantity 
and proportion of southern pine lumber, 1909-1920. 



Year. 


United States 
(feet), 


Southern pine. 


Feet. 


Per cent. 


19091 


44, 509, 761, 000 
40,018,282,000 
37,003,207,000 
39,158,414,000 
38, 387, 009, 000 
37, 346, 023, 000 
37,011,656,000 
39,807,251,000 
35,831,239,000 
31, 890, 494, 000 
34,552,100,000 
33, 798, 800, 000 


16,277,185,000 
14,143,471,000 
12,896,706,000 
14, 737, 052, 000 
14,839,363.000 
14, 472, 804, 000 
14,700,000,000 
15,055,030,000 
13,539,464,000 
10,845,000,000 
13,062,900,000 
11,091,000,000 


36.6 


19101 


35.3 


1911 1 


34.9 


19121 


37.6 


19131..- 


38.7 


19141 


38.8 


19151 


39.7 


1916 i 


37.8 


19171 


37.8 


1918 i 


34.0 


1919 2 


37.8 


1920 3 


32.8 






Average 


37, 442, 853, 000 


13, 804, 666, 000 


36.9 







i U. S. Dept. of Agriculture Bui. 845, Production of Lumber, Lath, and Shingles, 1918, p. 18. 

2 United States Census. 

3 U. S. Dept. of Agriculture , Press Release, Oct. 24, 1921. 

Since 1909 both the total production for the country and the pro- 
duction of southern pine lumber have shown a marked tendency to de- 
crease. This was especially true during the four years 1917 to 1920, 
inclusive. Throughout this period southern pine has represented be- 

* Report of the United States Forest Service on Timber Depletion, Lumber Prices, 
Lumber Exports, and Concentration of Timber Ownership, 1920, p. 20. 



GENERAL SURVEY. 7 

tween 33 and 40 per cent of the annual production, but has decreased 
in volume from about 16,250,000,000 feet in 1909 to slightly more than 
11,000,000,000 feet in 1920, a decrease of nearly 32 per cent in 11 years. 

The Forest Service reports that in 1920 the Pacific and Rocky 
Mountain States produced about 36 per cent of all the lumber cut, 
while the eight States of the southern area, consisting of Alabama, 
Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, and 
Texas, produced 34 per cent, and all the rest of the country ap- 
proximately 30 per cent. Thus in 1920 these eight States, for the 
first time in considerably more than 20 years, yielded first place 
in total volume of lumber produced to another area. This fail- 
ure to hold first place in 1920 was due mainly to the decrease in pro- 
duction of southern pine, which represented by far the largest part 
of the lumber produced in the States name'd, as well as to the increased 
production in the Pacific and Rocky Mountain areas. 

ExroRTs of southern pine. — Although lumber was one of the first 
articles exported from this country, the quantity and value of ex- 
ports were not large until recent years. Prior to 1914 the quantity 
and value of exports were on the increase. The year of maximum ex- 
ports of all kinds of lumber was 1913, when 3,400,000,000 feet were 
exported, which was equivalent to about 9 per cent of the total pro- 
duction for that year. 

In recent years southern pine has been exported in larger quanti- 
ties than any other species of lumber, but during and since the World 
War all lumber exports have decreased to such an extent that the 
quantities exported in 1918 and 1919 were only about one-third as 
large as in 1913. Since the war, continued abnormal exchange condi- 
tions and high ocean-freight rates have prevented the normal resump- 
tion of export trade, particularly that with European countries, 
which constituted about 40 per cent of the total prior to the war. 
Decreased export trade has fallen most heavily upon softwoods, and 
the decline in the demand for export shipments was an important 
factor in the decrease in the 1917 and 1918 production of southern 
pine. 

Southern pine producing and distributing agencies. — As con- 
ducted in different sections of the United States, there are five prin- 
cipal branches of the lumber business, viz, (1) ownership of stand- 
ing timber; (2) logging, including delivery to sawmill; (3) manu- 
facture of lumber; (4) wholesale distribution; (5) retail distribu- 
tion. There is considerable integration of the different branches of 
the lumber business in the southern pine region. Throughout the 
South the ownership of timber, logging, and manufacture are gen- 
erally combined, and most large interests also have their own organ- 
izations for wholesale distribution. In recent years a number of man- 
ufacturers, in order to secure larger sales and more economical dis- 
tribution, have marketed their own output directly to the consumer 
through the institution of a system of retail " lineyards," thus estab- 
lishing a complete integration in all of the steps of lumber production 
and distribution. 

It is estimated that sawmills producing southern pine lumber sell 
about one-fourth of their production directly to railroads, construc- 
tion companies, and other large consumers, and approximately 35 per 
cent to retail yards or directly to the small consumer through their 



8 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

own retail yards, making a total of 60 per cent of the total quantity 
that is marketed without the intervention of the jobber. The re- 
maining 40 per cent is, for the most part, the product of relatively 
small mills and is marketed through wholesalers, who generally 
provide such manufacturers with a more efficient selling organization 
than they could provide for themselves. The operations of many 
of the smaller mills, particularly those located in Georgia and 
Florida, that market their lumber through wholesalers, are financed 
to a greater or lesser extent by those distributing their output. As 
the larger timber holdings are cut out and southern pine production 
becomes more and more confined to small mills operating on limited 
timber supplies, the proportion of the total product marketed 
through middlemen will probably show a marked increase. 






Chapter II. 
ACCOUNTING CONDITIONS, METHODS, AND PROBLEMS. 

Section 1. Accounting conditions. 

Conditions of lumber accounts. — The result of the Commission's 
efforts to obtain accurate war-time costs from manufacturers of 
southern pine lumber indicated that comparatively few companies 
had really adequate accounting systems. In fact, at the beginning of 
the Commission's cost work the term " cost accounting " was entirely 
new to many manufacturers. It was not until the Government began 
taxing incomes and later entered upon its war-time program of fixing 
prices on the basis of cost that the necessity of good accounting and 
cost records was brought home to many lumber companies. It was 
then also that some lumbermen discovered that certain operations 
had been conducted without profit for years and might better have 
been discontinued. 

At the beginning of its war-time investigations the Commission 
found records in the lumber industry ranging from check-book stubs 
to very complex and highly organized accounting systems showing 
the cost of every operation, the classification of all expenses, the costs 
by elements, and the allocation of general overhead to each of the 
departments. Some companies kept accounts showing no details 
other than the amounts paid for labor, salaries, and supplies. Some 
charged all expenses, of whatever nature, into an expense account. 
In a number of cases the Commission found that the books had not 
been closed for the preparation of balance sheets for several years. 
The costs of box factory, rosin, turpentine, and farm operations were 
in many cases combined with lumber cost accounts in such a manner 
that it was impossible to ascertain the true cost for anv of them. 

In examining the cost records it was found in a great many cases 
that the cost statements could not be reconciled with the financial 
statements. In some cases the practice of charging stumpage to 
cost at figures higher than those shown b}^ the timber account had 
been carried to such a point that the entire timber account had been 
written off some years before the cut was completed ; the remain- 
ing timber had been written back on the books and the practice was 
being repeated. The cost statements frequently contained items such 
as depreciation and certain overhead expenses for which no entries 
whatever appeared in the general books. 

Another practice not in conformity with good accounting was that 
of charging supplies into costs at figures higher than actual cost. 
This practice resulted in the cost statement being inflated by the 
amount of the overcharge and the profit and loss statement being 
correspondingly reduced. The charging of logs into the manufac- 
turing department at a figure higher than the production cost in the 
logging department is another example of bad accounting practice 
which also existed. 



10 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

Certain characteristics of the industry itself explain to a consid- 
erable extent why deficient accounting methods were used. Al- 
though the ownership of the widely distributed standing timber of 
the country shows considerable concentration in the hands of large 
interests, the Bureau of the Census reports that 30,235 sawmills 
were operated in the United States in 1919. This large number of 
mills is accounted for by the fact that the great bulk and weight of 
logs make prohibitive the expense of transportation from the widely 
scattered timber areas of the country to a few large production cen- 
ters. Even those interests having comparatively large and contigu- 
ous timber holdings find it cheaper to build new mills where the tim- 
ber is located than to attempt to bring the logs long distances to a 
single large mill. The result is that lumber manufacturing is car- 
ried on in a large number of comparatively small mills located in 
hundreds of widely scattered small towns, a condition that has 
greatly handicapped the industry in the general adoption of scien- 
tific cost accounting methods. 

The difficulty and expense of securing trained accountants capable 
of installing and supervising adequate cost accounting systems 
made many owners and managers of the smaller mills feel that they 
were not justified in spending the money necessary to keep good 
records. Others contended that their operations were family af- 
fairs, and so long as their expenses were less than their incomes 
they were satisfied. Some companies, on the other hand, had com- 
plete, and in some cases very detailed, cost systems. 

Considerable work had been done by the various lumber manu- 
facturers' associations along the line of urging the adoption of 
uniform methods of computing costs. Much of this work had 
educational value in bringing about a clearer understanding of the 
need of accurate costs, but along with this beneficial work certain 
methods that are not in accordance with good accounting practices, 
such as the charging of stumpage into costs at estimated current 
market values and charging interest on investment to costs, have 
been in some instances advocated by association officials. The rec- 
ommendation of such practices appears to have had for its object 
the adoption of such methods as would yield uniformity in the 
costs of all companies in the reports submitted to the associa- 
tions, rather than the determination of the actual costs of individual 
companies. Consequently, while the activities of the associations 
did much to convince individual manufacturers of the need of bet- 
ter cost accounting, the exact procedure recommended was not 
always in conformity with good accounting practice. The result 
of all this was that while some companies had more or less inde- 
pendently installed good systems, others had adopted faulty methods, 
while still others had done little or nothing toward adopting ade- 
quate cost systems. Consequently, when the Commission began 
gathering information on costs in July, 1917, there was wide diver- 
gence of opinion as to what constituted costs as well as to the proper 
methods of ascertaining them. 

Lack of information regarding production. — In keeping rec- 
ords of the footages passing through the various operations there 
was a marked lack of uniformity. Some companies kept separate 
production records for each operation in bringing the logs to the 



ACCOUNTING CONDITIONS. 11 

mill and in manufacturing them into different kinds of lumber. 
A large number, however, kept only the footages applying to major 
operations, such as logging and sawmilling, but kept no record of 
the number of feet passing through particular operations, such 
as yarding, dry kiln, or planing mill. There were other cases 
where no record of production of any kind was kept, the com- 
panies depending entirely upon the quantity sold, which figure 
was applied against the total production cost in order to arrive at 
the unit cost per thousand feet. 

Section 2. Accounting methods and problems. 

Unit costs. — In sawing lumber, logs of various grades are used, 
and, from each grade, lumber of different sizes and grades is pro- 
duced. If the mill is using logs that are of uniform quality, it will be 
using a raw material that shows for a specific accounting period an 
average cost which is uniform per thousand feet. This raw material 
(stumpage) when mechanically divided into lumber will produce a 
certain percentage of each of several grades. Furthermore, in order 
to meet market demands, as well as to most efficiently utilize different 
parts of the log, various sizes of each grade will be produced. At any 
particular time the machine processes involved, and therefore the 
manufacturing expenses incurred, in producing a given size and 
finishing it in a given manner will be identical per thousand for 
each of the grades produced. The physical basis for computing 
unit manufacturing costs is the number of processes through which 
the material passes to produce a given size finished in a given man- 
ner regardless of the grade. The principal object of grading is to 
obtain the best market price for the finished product. Its only 
relation to costs is that by grading the product at certain stages 
in manufacture it may be possible to prevent unnecessary processing 
of low-grade stock. 

In the Southern States timber used in the mill is generally owned 
by the interests operating the mill. It was bought at prices de- 
termined at the time of purchase by the general grade of the timber 
itself. When cut, the logs are not graded strictly but are charged 
into costs at a uniform price per thousand feet. However uniform 
their grade may be, when sawed, the logs produce various grades of 
lumber, the raw material cost of which as charged by the mills is the 
same for all grades. Furthermore, mill experience is that if a given 
size is produced, it will be produced in various grades, and, provided 
the same finish is given to all grades, at identically the same cost per 
thousand. 

Disregarding the question of grades it is possible, provided suffi- 
ciently detailed departmental production and cost records are kept, to 
determine the unit cost of a given size finished in a given manner by 
adding to the cost of stumpage the cost of each of the processes 
through which the material passes. Although, as stated above, 
various manufacturers' associations have given a great deal of atten- 
tion to the question of educating their members regarding the de- 
sirability of ascertaining such costs, few southern mills kept suffi- 
ciently detailed departmental costs in 1917 to even roughly approxi- 
mate unit costs by sizes. In fact the majority of mills made little or 
no attempt to keep costs and productions segregated even on the 



12 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

broadest departmental lines. Many mills, although they were able 
to report data from which the average cost of sales for mill-run 
lumber, as shown in subsequent pages, was computed, found their 
records inadequate to yield detailed information as to costs by opera- 
tions in the form requested. In the discussion of costs by operations 
it has accordingly been necessary to confine attention in the ensuing 
pages to the average cost per thousand feet of mill-run lumber for 
stumpage, logging, manufacturing, administrative, shipping, and 
selling expenses. Unit logging cost is based on the board measure 
footage logged, manufacturing and administrative costs on the foot- 
age manufactured, and shipping and selling costs on the footage 
sold. The figures thus obtained fail to show the costs of specific 
items. Their principal value is that for the considerable number of 
mills they reflect the general movement of manufacturing costs by 
operations during the period covered. When added together they 
yield a cost to produce and sell which differs slightly from the more 
accurately computed average cost of sales. 

It was found that in some cases mills having costs segregated to a 
greater or less extent by operations, computed their mill-run cost of 
production for each operation on the basis of the footage passing 
through it, and then added together the unit costs thus secured to 
obtain the average cost of mill-run lumber. This would be correct 
if all lumber produced passed through each and every process. In 
actual practice, however, this is not true, hence it is incorrect to call 
such a figure an average cost for all lumber produced. For instance, 
taking the results for a particular company, the cost per thousand 
obtained by adding together the unit costs for sawmill, green sorter, 
stacker, dry kiln, dry sorter, rough shed, yard expense, planing mill, 
and finished shed, plus depreciation amounted to $11.61 per thousand 
feet. This represents the average cost of that part of the product 
which passed through each and every process. The correct average 
cost for mill-run lumber, obtained by dividing the total cost of manu- 
facture by the sawmill cut, resulted in an average cost for run of mill 
amounting to $9.47 per thousand feet. 

By-product costs. — No uniformity was found in the method of 
handling by-product costs. Some companies reduced the cost of 
lumber manufacture by the amount of income derived from the sale 
of by-products. Others credited the amounts received from the sale 
of laths, shingles, etc., to the profit and loss account as income from 
other sources without charging these by-product operations with 
their proportion of costs. The costs in these particular instances 
were included as a part of the cost of manufacturing lumber. The 
result of this method was to inflate the lumber production cost. 
Still other companies charged the direct conversion cost to the va- 
rious by-product operations, but made no charge for raw materials 
used and allocated no part of the general overhead expense applying 
to these operations. There were also some companies having tur- 
pentine and rosin operations, the expenses of which were combined 
with lumber costs, and this, of course, made it impossible to ascer- 
tain accurately the cost of producing lumber, turpentine, or rosin. 
In its schedule for the reporting of lumber costs the Commission 
adopted the plan of deducting income from by-products sold from 
the total lumber manufacturing cost. In the following pages unit 



ACCOUNTING CONDITIONS. 13 

costs are shown both before and after deducting the average income 
per thousand for by-products as reported by the companies. 

Interest. — Good accounting practice excludes all interest from 
direct manufacturing costs, and treats interest actually paid as a 
financial item in pront and loss. Many lumber companies, however, 
included in their direct costs interest on short-term notes; others 
interest on short-term notes and bonds; and still others interest on 
long and short term borrowing and also hypothetical interest on 
" owned •' investment. 

The practice of including interest was encouraged by one of the 
largest lumber manufacturers' associations of the South, which in- 
structed its members in reporting costs to the association to include 
interest at 6 per cent on 50 per cent of the investment. By invest- 
ment, according to instructions given out by this association, was 
meant the prevailing market value of land and timber plus what it 
would cost to replace the entire plant. These various methods of 
treating interest gave rise to large variations in the amount of 
interest charged to costs, and, of course, very materially inflated the 
costs as reported by a considerable number of companies. Efforts 
were made to exclude all interest from manufacturing costs compiled 
for the War Industries Board as well as for this report. 

Inventories. — At various stages in the manufacture of lumber, 
inventories of logs and partially finished as well as finished lumber 
are accumulated. Logs, for instance, may accumulate in the woods 
and at various points in transit from the woods to the mill as well 
as in the log yard or mill pond. Few mills of the South kept any 
strict record of the movement of logs from the woods to the mill, 
hence inventories necessary to explain differences in footages at 
different stages in manufacture were frequently lacking. 

Three different practices of valuing finished lumber inventories 
were generally used in the industry, namely, market value, cost, and 
arbitrary value. Market value was used by some companies, because 
it served as a basis in the settlement of insurance claims and pre- 
miums, and also because it included the unrealized profit if the mar- 
ket were above cost. Only a few companies took inventories at actual 
cost. A considerable number of companies using the arbitrary value 
had for many years followed the custom of taking the inventory at 
an unvarying rate, regardless of changes in cost or market value. 
One company, for example, still valued its stock at $10 per thou- 
sand feet when its costs were about $20, and as a result it showed a 
loss on its books for its stock of $10 per thousand feet, notwith- 
standing the fact that the finished lumber had a market value of 
approximately $25 per thousand feet at the time. For the purpose 
of this report inventory values as reported by the companies were 
used. 

Repairs and improvements. — One of the most striking instances 
of incorrect accounting, and one which ever}' effort was made to 
correct, was the practice of charging extraordinary repairs or im- 
provements into costs during the month when such repairs and im- 
provements were made or paid for, without taking into account the 
fact that such expenditures frequently applied to a period covering 
several months or perhaps a year or more. This was especially true 
in the handling of spur tracks, the costs of which were charged into 

105332°— 22 3 



14 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

costs the month when completed instead of being prorated over 
the period during which the particular spurs would be used. If a 
bridge on a main-line railroad was built, or supplies were bought for 
a period of six months, they were often charged to the costs of the 
month in which the bridge was completed or the supplies were pur- 
chased. As a result of such practices the lumber production cost 
would show as much as a 100 per cent increase in a single month over 
the previous months. In the annual cost statements the general effect 
of the practices described, in so far as they were applied in charging 
repairs or improvements the use of which extended into subsequent 
years, or to supplies not consumed during the year, was the same as 
for the monthly statements, although the fluctuations were less 
evident. 

Depreciation. — At the beginning of the cost investigation the 
agents of the Commission found that in many instances no deprecia- 
tion charges were made ; in other cases it was a spasmodic and arbi- 
trary charge ; and in still other instances the amount was contingent 
upon the profits made during the year. In the last-mentioned case, 
if the earnings were unusually large, a liberal charge was made ; but 
if the earnings were just ordinary, only a minor charge was made; 
and, if earnings were small, or if there was a loss, no depreciation 
charge of any kind was made. 

In some cases a fixed depreciation charge per thousand feet board 
measure was made, estimated to be adequate to extinguish the plant 
and equipment upon completion of the cut. Some companies made 
this charge in a lump sum to cover all departments. Others applied 
it by departments to the footages passing through the departments. 
Still others simply charged a percentage of the total investment, 
varying from 2^ to 20 per cent annually to total costs for the year. 
In this report depreciation has been used as reported by the com- 
panies. The lack of uniformity in methods of handling the charge, 
however, indicates that the industry can do itself a great service if 
better methods of determining and applying the charge can be 
worked out in accordance with good accounting principles and their 
general adoption brought about. 

Stumpage. — In examining the records of southern pine lumber 
companies it was found that stumpage (standing timber) appeared 
on the books in one of the following ways: (1) Original cost; (2) 
original cost plus carrying charges; (3) value as of March 1, 1913 
(the date allowed by the income-tax regulations) ; (4) estimated cur- 
rent market value; or (5) arbitrary value. 

Of the five methods named above only the first two, except by for- 
tuitous combinations of circumstances, can meet the requirements of 
good accounting practice in the determination of either cost or 
profit. Owing to the use of one or the other of the last three 
methods, many companies either experienced considerable difficulty 
in reporting stumpage at cost as called for in the Commission's 
schedule, or failed to do so, and as a consequence the figures which 
were included in the Commission's reports to the War Industries 
Board were not, strictly speaking, cost figures, because some of those 
submitted were considerably above cost, owing to reappraisals, and 
others were below cost, due to failure to add to the original cost of 
stumpage legitimate carrying charges from the date on which the 



ACCOUNTING CONDITIONS. 15 

stumpage was acquired to the date on which the cutting was begun. 
This condition made it necessary for the Commission, in determining 
the cost of producing lumber for the price-fixing committee, to set 
up the figures in the cost statements in two different ways, namely, 
the cost of producing lumber exclusive of the stumpage charge as 
reported by the companies and the cost of producing lumber includ- 
ing the reported stumpage charge which, as already explained, was 
not in all cases a true stumpage cost. In transmitting costs to the 
price-fixing committee of the War Industries Board, the Commis- 
sion made this situation clear. The same inaccuracies apply to a 
less extent to the stumpage costs shown in this report because more 
thorough revision has in some cases been made. 

Correctly handled, stumpage investment should be carried on the 
books and the stumpage cost charged to costs at actual cost plus 
carrying charges, if any. If the tract represents only such a quan- 
tity of timber as the mill may reasonably be expected to cut during 
its normal life and operations were begun immediately after its 
purchase, the stumpage investment should be carried on the books 
and the timber cut charged to cost at the original cost, or purchase 
price, and all carrying expenses charged directly to costs. If, how- 
ever, the tract was purchased and held for some time before it be- 
came definitely related to a manufacturing operation, thereby entail- 
ing the payment of taxes, insurance, and other direct expenses inci- 
dent to properly caring for and safeguarding the property, these 
charges should be added to the original cost of timber. The period 
covered by carrying charges thus capitalized in the timber account 
should be from the date of purchase to the date on which the tract 
became definitely related to a mill as a part of a total supply of 
accessible timber that the mill may reasonably be expected to cut 
during its normal life. The items that may legitimately be capital- 
ized in this manner include, as already stated, taxes, insurance, and 
other expenses incident to the proper supervision of the property, 
but they do not include interest paid on bonds or timber notes. 

Two methods of handling sturnpage in cost. — There are two prin- 
cipal views regarding the treatment of stumpage as an element of 
cost. The first and correct view is that it should be charged at actual 
cost, while the second and incorrect view is that it should be charged 
at its market value at the time it is cut. 

The Commission's war-time task was to ascertain as accurately as 
possible the cost of producing lumber, hence instructions were issued 
to its agents, and later to mills in connection with the cost schedule, 
to include stumpage at original cost of timberlands owned, less the 
value of surface or cut-over lands, divided by the estimated yield of 
timber at the time the timber was purchased. To this such carrying 
charges as taxes and insurance on a reasonable amount of timber were 
to be added, but interest on timber investment was not to be included 
in stumpage cost. In case the original cost of timberland could not 
be ascertained, the book value as of December 31, 1918, was to be used. 
This was done merely to provide a uniform arbitrary rule for han- 
dling all cases in which original cost could not be ascertained. 

If stumpage is charged into costs at any value other than actual 
cost (or if applicable, actual cost plus legitimate carrying charges 



16 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

from date of purchase to date on which cutting was begun), the cost 
statement no longer represents the true cost of lumber. For instance, 
if market value of $6 per thousand is used for stumpage that actually- 
cost $4 per thousand, the cost statement is thereby made to show a 
cost of production $2 per thousand higher than actual cost, and 
profits shown for the year are correspondingly reduced. If, on the 
other hand, stumpage is charged into costs at an arbitrary figure 
less than cost, say $2 per thousand, when it actually cost $4, the 
converse is true with respect to both costs and profits for the year. 
In case the first method is pursued to the end of the cut, there will 
be a considerable profit shown by the timber account remaining to be 
divided, while if the second practice is used to the end of the cut, 
there will be a deficit to be absorbed. 

It is frequently argued that mill owners having stumpage pur- 
chased long ago at low prices should charge it into costs at present 
market values in order to make their costs comparable with those 
of mills that have purchased their stumpage recently at high prices. 
Since charging stumpage into costs at other than its actual cost pro- 
duces fictitious cost showings, the argument can have no support 
from an accounting viewpoint. 

The real point of contact between two competitors, one of whom 
has low cost and the other high cost stumpage, lies not in uniformity 
of cost showings but in the market price at which the products of 
both will sell. Both are striving to get the best possible price for 
their products under the existing state of market demand. In for- 
mulating their sales policies and prices, both should have accurate 
knowledge of their respective true costs. In the case of the manu- 
facturer having low-cost stumpage, it may be highly desirable to 
know not only what his costs actually are but also what they would 
be were he obliged to pay current prices for stumpage. By knowing 
the latter he is able to estimate with some degree of accuracy the 
minimum-price competition of his less fortunately situated com- 
petitors, and can formulate his sales policy and selling prices so as 
to take the fullest possible advantage of his superior competitive 
position arising out of his earlier purchase of stumpage. At all 
times, however, the accounting systems of both should show their 
true costs. In times of advancing prices the market will absorb the 
production of both, but in times of falling prices true costs may be 
no less important to the low-cost than to the high-cost mill in deter- 
mining what production and sales policy to pursue. 

Capitalization of interest in the timber account. — Interest pay- 
ments on bonds or timber notes must be paid whether or not there 
is any income realized from the particular timber tract on which 
the money is borrowed. The necessity of meeting these payments 
has in the past been an important factor in the development of 
sawmill capacity in excess of current market needs, as timber own- 
ers found it necessary to put their holdings on an operating basis 
to meet their interest payments. At the present time most of the 
large holdings of the southern-pine region are rapidly becoming 
definitely related to milling operations, but the question as to how 
best, from an accounting viewpoint, to treat interest payments on 
outstanding bonds and timber notes during the period that timber 
reserves are held out of use is one on which opinions differ widely. 



ACCOUNTING CONDITIONS. 17 

It is frequently argued that such interest payments should be 
capitalized in the timber account, a practice that has been followed 
by a considerable number of timber owners. As capitalizing in- 
terest rapidly increases the book value of the timber, the period dur- 
ing which it can be done depends on the movement of stumpage 
values which in turn are dependent on the market prices that can be 
obtained for lumber. Unless the advance in prices of stumpage and 
lumber from year to year are greater than the amount of interest 
paid, the holding must eventually be sold or exploited at a loss 
regardless of the manner in which interest charges have been handled. 
From the accounting viewpoint that no interest should find its way 
into costs the practice would not be approved, as any interest capi- 
talized would ultimately become a part of the cost of stumpage when 
the timber is finally cut. 

For income-tax purposes the Treasury Department allows the de- 
duction of interest paid on real estate mortgages from taxable in- 
come. If interest is capitalized in the timber account, it can not be 
deducted from taxable income for the year because, when capi- 
talized, it loses its identity as interest. It would therefore seem 
inadvisable either from a cost accounting or a tax payer's viewpoint 
to capitalize such interest payments. It would rather seem advisable 
to pay them out of earnings from current operations, even though 
to do so may place a heavy burden on present profits. Handled in 
this way, full advantage is taken of possible income-tax deductions, 
and anticipated future profits in the form of capitalized interest 
charges are not worked into future costs. 

Stumpage and cut-over lands. — From the information at hand it 
appears to be a rather common practice among southern pine lumber- 
men in determining the cost of stumpage to simply divide the total 
cost of the timber, including the land, by the quantity of standing 
timber and call this the unit cost. This method is correct if it is cer- 
tain that the land possesses no value, but is erroneous if the land 
possesses value. The value of cut-over land ranges, according to its 
character and location, from practically nothing to approximately 
the value of unimproved agricultural land of the same grade in the 
same general locality. In some cases, indeed, lumber operations are 
conducted at a loss over very sparsely wooded sections in order to 
make the land available for agricultural purposes. 

In view of these varying conditions, it is clear that the correct 
method of determining stumpage cost is to deduct the fair value of 
the land from the total cost of the timber and land and divide the 
remainder by the number of thousands of feet of standing timber in 
order to get the cost per thousand feet. If. for example, a lumber 
company buys 10,000 acres of timber land scaling 10,000 feet per acre 
at a cost of $60 per acre, making a total cost of $600,000, the total 
quantity of standing timber on the above basis amounts to 100,- 
000,000 feet, which, divided into the total cost oi the timber includ- 
ing the land, gives a cost of $6 per thousand feet. Let it be assumed 
for the sake of this illustration that the value of the land after the 
timber has been removed is $10 per acre according to contemporary 
sales of similar tracts, or a total value for the land alone of $100,000. 
Deducting this amount from the total cost of $600,000, the net cost 
of the timber is $500,000, which amounts to $5 per thousand feet as 



18 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

compared with a cost of $6 when no consideration is given to the 
value of the land. Under such circumstances a land account should 
be kept separately, and all charges properly belonging to land should 
be debited and all sales of land credited to that account. 

Carrying charges in costs. — As has been previously indicated, 
carrying charges, such as insurance, taxes, and other expenses incident 
to the supervision of the property, but not interest, incurred on timber 
tracts before they are definitely related to a manufacturing enterprise 
and cutting is actually begun, may be capitalized as a part of the 
timber account of the mill. After cutting actually begins such 
charges should properly be included in operating costs. This was 
generally the practice of the mills, but there was considerable differ- 
ence of opinion as to what constituted legitimate carrying charges. 
Frequently, in addition to legitimate charges, interest paid on timber 
notes and bonds was charged to costs. Interest is, as previously stated, 
a profit and loss item and not an item of cost ; consequently it should 
not be included in carrying charges at any time. Wherever shown to 
have been included in costs it has, as previously stated, been elim- 
inated. 

As the timber on a given tract is cut, carrying charges decrease from 
year to year, thus reducing the amount charged to costs and the 
amount of carrying charges per thousand feet of lumber produced as 
the cut proceeds. If it is desired, the total carrying charges that 
must be incurred during the life of the operation may be estimated 
at the outset and charged to costs at a flat rate per thousand subject 
to adjustment if it is found that for any reason the original estimate 
was incorrect. If the rate of cut estimated at the outset is not for 
any reason maintained, the length of the operation will be increased, 
while if the rate of cut is increased the converse will be true. In 
either case adjustments in the estimated total amount of carrying 
charges to cover the increased or decreased time during which carry- 
ing charges are paid will be necessary. The carrying charges which 
are charged to current operating costs should not cover a supply of 
timber greater than the mill may reasonably be expected to consume 
during its normal life. Carrying charges on stumpage that can not 
be reached from present mill operations should be capitalized in the 
accounts of the future milling projects to which the stumpage ulti- 
mately may become related. 

Section 3. Importance of good accounting methods. 

Adequate accounting records are among the prime essentials in the 
successful conduct of modern business enterprise. The purpose of 
accounting is to give a systematic and true statement of the condition 
of the business. Any good accounting system applied to the lumber 
business would have to conform to the economic facts of the industry. 
Detailed information on the cost of raw materials, the cost of con- 
verting them into finished products, and the cost of placing them on 
the market is necessary to determine the profitableness of the lumber 
business as well as to decide whether it is more profitable to manufac- 
ture a few staple grades or many highly finished products. As ap- 
plied to marketing lumber, an adequate cost system, where various 
methods of distribution are in use, should show whether it is more 
profitable to sell the product to the wholesaler, to the retailer, or 



ACCOUNTING CONDITIONS. 19 

directly to the consumer, or to use all three of these avenues of 
distribution. 

In addition to its general advantages in relation to business organ- 
ization and business policy, systematic accounting in the lumber 
business would be of direct benefit in connection with banking service, 
with income taxation, and with Government cooperation in general. 
Where lumber investments have been regarded unfavorably by bank- 
ers, the hesitation to grant credit except at high interest rates may 
often be traced to the inabiltiy of the lumberman to make a clear and 
conclusive statement of the financial condition of his company. Until 
lumber cost accounting systems are so improved that a systematic 
and true statement of the current condition of the business can be fur- 
nished in financial statements it is not probable that adequate credit 
facilities will be available to the industry. In the absence of a sys- 
tematic method of stumpage valuation and accounting it is not likely 
that the Federal income tax can be administered without discrimi- 
nation affecting different companies and producing sections. More- 
over, Government activity of whatever kind with respect to the lum- 
ber industry is handicapped by the lack of comparative information 
which only systematic and intelligent methods of accounting can 
adequately supply. 

It sometimes happens that unusually low prices develop in an in- 
dustry through the policy of price cutting by those who have no 
definite knowledge of their costs as compared with their selling 
prices. There are times, of course, when a company, or even an in- 
dustry, is compelled to dispose of its product at a temporary loss in 
order to meet changing conditions. Such a situation justifies sharp 
price reductions. This, however, is an entirely different matter from 
low-price competition resulting from ignorance of true costs. If 
manufacturers consistently make low prices because they do not ac- 
curately know what their costs are, the results may be serious not only 
to themselves but to the whole industry. 

The position taken by a considerable number of business men that 
a modern accounting system costs more than it is worth is generally 
based either on failure to recognize its fundamental value and im- 
portance in the conduct of their businesses or on unfortunate experi- 
ences in which they have adopted systems too complicated for their 
needs. The general principles of accounting apply with equal 
force to a large or a small business. There is, however, a wide varia- 
tion in the manner of their application, depending on the type and 
volume of business done. In a given line of business a complicated 
system yielding costs in great detail may be absolutely necessary to 
a firm transacting a large volume of business, while the same system 
adopted by a firm doing a smaller volume of business may be un- 
necessarily expensive. Care must be exercised, therefore, in adopting 
a system to fit it to the size and fundamental needs of the business 
rather than to secure perfection in showing every detail of cost. 



Chapter III. 
INVESTMENTS AND EARNINGS. 

Section 1. Scope of discussion. 

Government control, 1917-18. — During much of the period 
from January 1, 1917, to December 31, 1918, covered by this report, 
the southern pine lumber industry was, as previously stated, under in- 
creasingly strict governmental regulation both as to prices and distri- 
bution. The first price regulation was the agreement of June 13, 1917> 
between representatives of the southern pine mills and the lumber and 
forest products committee of the Council of National Defense. By 
this agreement the prices of Government cantonment stock were fixed 
at an average price of $20 per thousand for the various grades used. 
Somewhat later similar price agreements fixing the prices of lumber 
for other Government purposes were entered into, and one year 
later, in July, 1918, regulation of prices was extended by the War 
Industries Board to all civilian as well as Government purchases. On 
the distribution side various priority regulations affecting the trans- 
portation and use of lumber tended to restrict its production and to 
confine its distribution to those uses most vitally connected with the 
conduct of the war. 

During the period of price fixing by the War Industries Board 
the Federal Trade Commission was requested to compile data re- 
specting the costs, profits, and investments of lumber manufacturers 
so that the Price Fixing Committee of the War Industries Board 
would be in a position to determine prices with some knowledge of 
what they would yield the industry in rate of return on capital in- 
vested. In order to supply this information it was necessary for the 
Commission to have its field agents make balance sheet audits to ar- 
rive at the investments of individual firms engaged in the lumber 
business. During the actual war period such audits were made for 
about half of the southern pine operations whose costs are discussed 
in Chapter IV. This work was discontinued at the end of the price- 
fixing program and therefore included only part of the balance sheets 
secured by the Commission. 

Nature of investments. — Many companies have investments in- 
cluding not only standing timber, logging, and sawmilling equip- 
ment, but farms, cut-over lands, turpentine operations, lath and box 
shooks mills, etc. In a few cases the investment in by-product and 
outside operations were considerable in amount, but they represent 
only a small part of the total investment of all companies combined. 

The reports of the companies showed earnings from lumber segre- 
gated from other earnings, but many companies did not report the 
detail necessary to separate their timber and sawmill investment from 
their by-product and other investments. Although it would be de- 
sirable to show earnings from lumber in relation to timber and saw- 
milling investment, it is impossible to do so for want of more de- 
tailed information. Consequently, in order to present the results for 

20 



INVESTMENTS AND EARNINGS. 21 

both years for as large and representative a group of companies as 
possible, comparisons are confined to total earnings from all sources 
in relation to total investment, including by-product operations, farm 
lands, and outside investments. 

In most cases, as already stated, the by-product and outside invest- 
ments were small in comparison with the investments in timber and 
sawmills. A considerable number of companies showed small losses 
on their by-product operations, and even for those showing profits 
on by-products and outside investments the earnings were not large. 
Consequently the rates of return on total investment shown below 
are only slightly different from what they would be if only timber, 
logging, and sawmill investment, and earnings from lumber were 
used, and serve as a fairly accurate indication of the general con- 
dition of the southern pine lumber industry during the two war years. 

The net investment was computed from the liabilities side of the 
balance sheet and includes capital stock, bonded indebtedness and 
other long-time notes, surplus and reserves which were properly a 
part of surplus. Outside investments, such as Liberty bonds and 
stocks in other companies, were excluded. The Commission also 
excluded appreciation of stumpage whenever shown by the com- 
panies, consequently the investment is presented as reported by the 
companies and as revised by the Commission. (See p. 24.) 

Net earnings are presented both as reported by the companies 
and as revised by the Commission. The reported earnings include 
the profits for the entire business (less income from Liberty bonds 
and from stock owned in other companies). As bonded indebted- 
ness and long-time notes were included in investment the rate of 
return on investment was computed on the total earnings before the 
pajmient of interest. Whenever possible the Commission revised the 
earnings by the amount of the stumpage appreciation charged to 
costs. 

Number of companies included. — Of 205 companies whose aver- 
age unit costs, sales realization, and profits were reported (Ch. IV), 
157 returned balance sheets and profit and loss statements for the 
business year 1917 and 144 for 1918. For both years 143 identical 
companies returned complete cost and financial data, and these com- 
panies are identical with the group of 143 companies whose unit costs 
and prices are discussed in the latter part of Chapter IV. Several of 
the companies operated two or more mills and returned combined 
cost, profit and loss, and balance-sheet statements, so that the total 
number of individual operations included is somewhat larger than 
the total number of companies. 

In the ensuing discussion of profits in relation to investment vari- 
ous groupings of the companies are shown to bring out interesting 
features developed from the Commission's study of investment and 
profits on investment in the southern pine industry. Three general 
territorial groupings of companies are shown, the first and largest, 
called for convenience the Gulf States group, including interests 
located in the States of Alabama, Arkansas, Louisiana, Mississippi, 
Oklahoma, and Texas; the second, called the Georgia-Florida group, 
including operations of those two States : and the third, or Virginia- 
Carolina group, including companies operating in Virginia, North 
Carolina, and South Carolina. 



22 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Section 2. Investment and earnings on investment. 

Reported investment and earnings for 143 identical com- 
panies. — Table 37 (p. 74) shows for all companies furnishing ade- 
quate reports to the Commission, namely, for 157 companies in 1917 
and for 144 companies in 1918, the reported total investment in all 
operations, whether in lumber production or otherwise, and the re- 
ported total earnings from all sources. Table 4 shows the investment 
and earnings as reported by 143 identical companies in each year. 
The rates of profit shown are in each case substantially the same. 
This group is identical with the 143-company group whose costs are 
discussed in Chapter IV (see pp. 56 to 63). The rates of earnings 
after revision by the Commission are shown later (see p. 29). 

Table 4. — Total investment and earnings as reported by 143 southern pine 
lumber companies, by territorial groups, 1917 and 1918. 



Group. 





Number 


Year. 


of com- 




panies. 


1917 


116 


1918 


116 


1917 


13 


1918 


13 


1917 


14 


1918 


14 


1917 


143 


1918 


143 



Total investment. 



Total earnings. 



Rate of 
return on 
invest- 
ment. 



Gulf States 

Georgia-Florida. . 
Virginia-Carolina 
A 11 companies... 



$274, 272, 598. 77 

285,677,072.35 

12, 920, 913. 47 

12,331,393.03 

22,221,177.36 

24,060,910.16 

309, 414, 689. 60 

322,069,375.54 



$26, 360, 537. 30 

25,502,997.25 

1,064,869.95 

1,064,421.69 

465,641.06 

563,821.30 

27, 891, 048. 31 

27,131,240.24 



9.6 

8.9 
8.2 
8.6 
2.1 
2.3 
9.0 
8.4 



For all companies the percentage rate of return as shown by their 
reports decreased from 9 per cent in 1917 to a little over 8 per cent in 
1918, a comparatively small but appreciable decrease in rate. Two 
causes contributed to the decreased percentage rate, the first being 
the increase in total capital invested from approximately $309,000,000 
in 1917 to $322,000,000 in 1918, and the second being the decrease in 
earnings reported from approximately $27,981,000 in 1917 to $27,- 
131,000 in 1918. The total capital invested was about 4 per cent 
greater in 1918, and the total earnings from all sources were nearly 3 
per cent less in 1918 than in 1917. While the earnings per thousand 
feet increased 9 per cent in 1918 over 1917 the total quantity sold de- 
creased 11 per cent, these two factors working in opposition account 
for the 3 per cent net decrease in earnings. The Virginia- Carolina 
group showed a considerable increase in both investment and earn- 
ings, and a slight increase in rate of return on investment; the 
Georgia-Florida group showed a slight decrease in earnings, but an 
increased rate of earnings on investment, while the Gulf States group 
showed a considerable increase in investment, a less than propor- 
tionate increase in earnings, and consequently a decrease in rate of 
return. 

The increased investment in 1918 for some companies represents 
actual addition to properties by purchase of stumpage or by new con- 
struction and equipment. Others apparently wrote up, or " appre- 
ciated " the book values of their properties to figures approximating 
the then estimated current market value of stumpage and replace- 
ment value of plant. 

High and low rates for identical companies. — The ranges in in- 
dividual rates of reported earnings on investment included in the 



INVESTMENTS AND EARNINGS. 



23 



average rates in the preceding table are shown in Table 5 for all com- 
panies and for each group : 

Table 5. — High and low percentage rates of earnings on investment as reported 
by V}3 southern pine lumber companies, by territorial groups, 1917 and 
1918. 



Group. 



Year. 



Number 
of com- 
panies. 



Percentage rate. 



High. 



Low. 



Gulf States 

Oeorgia-Florida. 
Virginia-Carolina 
All groups , 



1917 
1918 
1917 
1918 
1917 
1918 
1917 
1918 



116 

116 

13 

13 

14 

14 

143 

143 



52.1 
51.7 
18.1 
16.3 
15.3 
9.9 
52.1 
51.7 



12.9 
U3.0 



3. 

1. 
ll. 
l 7. 
12. 



»13.0 



i Loss. 



The reported earnings of individual companies varied in 1917 from 
a loss of about 3 per cent to a profit of a little over 52 per cent, and in 
1918 from a loss of 13 per cent to a profit of almost 52 per cent. In 
both years the largest percentage rate of return on investment for a 
single mill, as well as the greatest loss, occurred in the Gulf States 
group. The Georgia-Florida group showed no losses and the extremes 
in rates of earnings were much more moderate, the highest rate for the 
two years being 18 per cent and the lowest about 2 per cent. In gen- 
eral the Virginia-Carolina group was the lowest profit group, its 
highest profit company showing earnings of 15 per cent in 1917 and 10 
per cent in 1918. Several companies in this group sustained losses 
in each year, the heaviest percentage loss being a little over 1 per cent 
in 1917 and about 8 per cent in 1918. 

Stumpage appreciation in investment and earnings. — As ex- 
plained in Chapter II, page 14, the use of appreciated values of 
stumpage in computing costs makes the amounts of profit shown for 
both years less than they should be for some companies, while for 
others the use of stumpage values less than cost makes profits shown 
larger than they actually should be. Furthermore, the use of appre- 
ciated values in investment tends to show percentage rates of profit 
on investment less than they should be while carrying stumpage or 
other investments on the books at less than actual cost tends to make 
rates of return on investment too high. 

Appreciation in the accounts of 57 companies. — Analyses of the 
timber accounts of 57 of the 143 companies are available which show 
that the cost of stumpage was not used in their timber accounts or 
cost statement in one or both of the years covered. In a few cases 
the companies carried their timber investment on their books at less 
than the amount paid for it and charged stumpage into costs at less 
than its actual cost. These cases, however, were the exception rather 
than the rule, the prevailing practice among the 57 companies being 
to carry their timber investments on their books at appreciated val- 
ues and to charge stumpage into costs at inflated figures. In some 
cases stumpage apparently was carried in the timber accounts at cost, 
but charged into costs at appreciated figures. In a few cases this 
practice had gone on until the timber account was totally written off 



24 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



before the cut was completed, and the remaining stumpage had been 
written back on the books, and the process begun again. 

Forty-two of the 57 companies required adjustments in both in- 
vestment and costs in both years, in most cases the change being due 
to carrying stumpage in investment and charging it into costs at 
figures higher than cost, i. e., at appreciated values. The remaining 
15 companies showed miscellaneous changes, usually due to appre- 
ciated values either in investment or costs, or in both, in one or the 
other of the two years. 

Table 6 shows the investment and earnings of the 57 companies 
as reported, the amount of appreciation in investment and in costs 
as shown by analysis of timber account, and the effect of adjusting 
the investment and earnings figures on the rate of return on invest- 
ment. The same data are also shown for 42 of these companies. 
These data, as stated above, are based entirely on figures reported by 
the companies and subsequently verified by agents of the Commission. 

Table 6. — Investment and earnings of 51 southern pine lumber companies as 
reported and after revision for appreciation in investment and costs, 1917 
and 1918. 



Item. 



57 companies: 

Reported investment 

Appreciation 

Revised investment 

Percentage decrease . . 

Reported earnings 

Appreciation in costs 

Revised earnings 

Percentage increase . . 
Reported rate of earnings 
Revised rate of earnings. . 

42 companies: 1 

Reported investment 

Appreciation 

Revised investment 

Percentage decrease. . 

Reported earnings 

Appreciation in costs 

Revised earnings 

Percentage increase. . 
Reported rate of earnings 
Revised rate of earnings. . 



1917 



$149, 379, 772. 33 
30, 685, 989. 85 



$118, 693, 782. 48 
20.5 



$14, 368, 054. 01 
4,411,299.81 



$18,779,353.82 

30.7 

9.6 

15.8 



$123, 594, 105. 83 
27, 782, 865. 73 



5, 811, 240. 10 
22.5 



$12,230,918.27 
4,165,026.31 



$16,395,944.58 

34.1 

9.9 

17.1 



1918 



$159, 479, 708. 92 
32, 801, 294. S3 



$126, 678, 414. 09 
20.6 



$14, 067, 017. 26 
4,319,236.82 



$18, 386, 254. 08 

30.7 

8.8 

14.5 



$133, 100, 256. 67 
29,815,912.07 



$103, 284, 344. 60 
22.4 



$12,406,532.96 
3,997,512.30 



$16, 404, 045. 26 

32.2 

9.3 

15.9 



1 Included in the 57 companies. 



The adjustments shown in each group are the net totals for the 
group, i. e., the difference between the amount by which the total 
timber investment for certain companies was increased, and the 
amount by which it was decreased for others. For instance, in the 
42-company group for 1917, 4 companies carried their timber invest- 
ment at less than actual cost by approximately $750,000. This 
amount has been deducted from the total appreciation for the remain- 
ing 38 companies to obtain the net appreciation shown in the table. 
The following year the understatement of timber values for 3 of the 
42 companies amounted to $70,000, which was likewise deducted from 
the appreciation shown by the remaining 39 companies. 



INVESTMENTS AND EARNINGS. 



25 



The result of all revisions for the 57 companies was a decrease in 
reported investment amounting to about 21 per cent in both 1917 
and 1918. The decrease in investment for the 42 companies was 
approximately 22 per cent in both years. 

The elimination of excessive depletion from costs resulted in an 
increase in amount of earnings of approximately 31 per cent for the 
57 companies in both years. The increase in amount of earnings 
for the 42 companies was 34 per cent in 1917 and 32 per cent in 1918. 

The effect on rates of earnings of carrying appreciated values in in- 
vestment and charging them into costs is strikingly brought out by 
the table. Based on the investment and earnings as reported, the 
percentage rate of return for the 57 companies was about 10 per 
cent in 1917 and nearly 9 per cent in 1918. After revision of invest- 
ment and earnings the corrected rate for the 57 companies is in- 
creased to about 16 per cent in 1917 and a little less than lo per 
cent in 1918. For the 42 identical companies the increase in per- 
centage rate was somewhat larger than that for the 57 companies. 

Fifty-seven companies grouped according to rates of return on 
investment. — Table 7 shows the results for the 57 companies grouped 
according to their respective rates of earnings on investment before 
and after adjustment for appreciation in investment and costs in 
1917 and 1918, together with the proportion of total production and 
the proportion of total investment for the 57 companies covered in 
each group. 

Table 7. — Percentages of production and investment, and rates of return, as 
reported by 57 southern pine lumber companies and as revised by the Com- 
mission, by profit groups, 1917 and 1918. 







Reported. 




Revised. 


Profit groups. 


Num- 
ber of 
com- 
panies. 


Per 

cent of 
total 

produc- 
tion. 


Per 

cent of 
total 
invest- 
ment. 


Rate of 
return 
on in- 
vest- 
ment. 


Num- 
ber of 
com- 
panies. 


Per 
cent of 
total 
produc- 
tion. 


Per 

cent of 
total 
invest- 
ment. 


Rate of 
return 
on in- 
vest- 
ment. 


1917. 
Loss 


1 

8 
19 
15 

5 

7 
2 


1.0 
15.5 
34.5 
21.6 

9.3 
15.7 

2.4 


1.7 

24.8 

37.8 

19.3 

7.5 

8.3 

.6 


10.1 
3.3 

7.7 
12.7 
16.5 
23.3 
45.4 










Under 5 


2 
14 

5 
14 

10 
12 


2.6 
24.6 

5.8 
28.9 
17.7 
20.4 


8.8 
29.8 

7.7 
28.3 
15.2 
10.2 


3.8 


5 to 10 


7.3 


10 to 15 


13.3 


15 to 20 


16.6 


20 to 30 


24.0 


Over 30 


38.7 






Total 


57 


100.0 


100.0 


9.6 


57 


100.0 


100.0 


15.8 






1918. 
Loss 


5 
8 
24 
7 
6 
6 
1 


6.1 
7.7 
46.6 
12.1 
14.7 
11.5 
1.3 


6.6 
12.6 
52.6 
11.7 
10.6 

5.3 
.6 


U.9 
2.5 
7.5 
11.5 
18.0 
24.2 
30.5 


3 

4 

10 

13 

12 

6 

9 


3.9 
4.6 
16.6 
24.5 
18.1 
14.4 
17.9 


4.6 
8.9 
17.2 
29.8 
18.8 
11.4 
9.3 


12.3 


Under 5 


3.7 


5 to 10 


8.2 


10 to 15 


12.7 


15 to 20 


16.8 


20 to 30 


22.7 


Over 30 


35.9 






Total 


57 


100.0 


100.0 


8.8 


57 


100.0 


100.0 


14.5 


• 





i Loss. 



Before revisions were made the majority of the 57 companies and 
the bulk of the total production and investment for both years fell 
in the four groups showing rates of return under 15 per cent. The 
result of revisions on the grouping of companies was to materially 



26 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



decrease the number of companies in these groups and to correspond- 
ingly increase the number of companies in the groups making over 
15 per cent in b^th years. After revisions for 1917 the majority of 
the companies and the bulk of their production and investment fell 
in the three groups having earnings averaging over 15 per cent on 
total investment. In 1918 the number of companies shifting to the 
higher-return groups was somewhat less than in 1917. 

It is to be noted that although the result of revisions made was to 
materially increase the average rate of earnings for the 57 companies 
in each year, the effect of shifting companies from lower to higher 
groups caused comparatively little change in average rate of return 
for the companies in each group except in the group making over 
30 per cent on investment. For the latter group, two companies in 
1917 had an average rate of about 45 per cent. After revision the 
number of companies was increased to 12 and their average rate of 
return decreased to less than 39 per cent. In 1918 one company before 
revision showed a rate of return of about 31 per cent on total invest- 
ment, while after revision 9 companies showed rates in excess of 30 
per cent, their average return being almost 36 per cent. 

Appreciation in the accounts of 143 companies. — For a part of the 
86 companies included in the group of 143 companies, shown in 
Table 4, complete analyses of investment are available, which indi- 
cate no appreciation in their investment as reported. For the others 
no analysis is available, consequently it is impossible to state whether 
they have appreciation in either investment or costs. In all proba- 
bility a number of the 86 companies had some appreciation in invest- 
ment or in costs, or in both. 

The following table summarizes the changes in rates of earnings 
for the 143 companies and for subgroups of the 143, consisting of 86 
companies showing no appreciation and 57 companies showing ap- 
preciation in investments or in costs, or in both, in one or both years. 

Table 8. — Comparison of rates of earnings on entire investment as reported by 
the companies and as revised by the Commission, 1917 and 1918. 







Rates of 


earnings. 




Item. 


1917 


1918 




As re- 
ported. 


As re- 
vised. 


As re- 
ported. 


As re- 
vised. 


Showing appreciation (57 companies): 

High 


46.4 
'0.1 


64.2 
0.9 


30.5 
12.8 


45.0 


Low 


13.7 






Average 


9.6 


15.8 


8.8 


14.5 






Showing no appreciation (86 companies): 

High 


52.1 
12.9 


52.1 
12.9 


51.7 
113.0 


51.7 


Low 


1 13.0 






Average 


8.5 


8.1 


8.0 


8.0 






Total (143 companies): 

High 


52.1 
12.9 


64.2 
12.9 


51.7 
113.0 


51.7 


Low 


!13.0 






Average 


9.0 


11.6 


8.4 


10.9 







1 Loss. 



INVESTMENTS AND EARNINGS. 27 

Analysis of revised rates of return on investment. — For the 
143 companies the result of revising investment and earnings was 
to increase the rate of total earnings to total investment from 9 
per cent to about 12 per cent in 1917 and from a little over 8 per 
cent to nearly 11 per cent in 1918. For 86 companies there were 
no adjustments ancf for the remaining 57 companies the adjustments 
made resulted in a marked increase in rate of return on investment 
in each year. On the whole, however, the effect on the percentage 
rate of return on investment of the practice of carrying timber in- 
vestment at appreciated values, and charging stumpage into costs 
at appreciated values is strikingly shown in the results for the 57 
companies. 

The table also shows the high and low rates of earnings on in- 
vestment for the 86 companies for which no revisions for apprecia- 
tion were made in investment or costs in comparison with the high 
and low rates of return both before and after revision in investment 
and earnings for the 57 companies. 

-Before revisions were made for appreciation in investment and 
earnings, the highest rate of earnings and the greatest percentage 
of loss occurred in both years among the 86 companies for which no 
revisions were made. In each year one company of the 86 made 
earnings amounting to slightly more than half of its total invest- 
ment. In each year, also, a number of the 86 companies showed 
losses, the largest loss in 1917 amounting to almost 3 per cent of the 
total investment and in 1918 to 13 per cent. After revision for 1917, 
the highest rate was shown for one of the 57 companies. In 1918, 
however, the highest rate of earnings was made by one of the 86 
companies for which no revision was made. 

Among the 57 companies for which revisions were made, a few 
showed large earnings, the majority showed moderate earnings, and 
but one company showed a small loss before, and none after revision 
in 1917. In that year the result of the revisions made was to increase 
the maximum rate of return for one company from 46 per cent to 
64 per cent, but to very slightly increase the minimum rate of return 
for the group. In 1918 the maximum rate of return for any indi- 
vidual company of the group, both before and after revision, was 
noticeably less than that of the preceding year. A few of the 57 
companies reported rates considerably higher than the average, the 
maximum rate for the group being just over 30 per cent as com- 
pared with 46 per cent for the previous year. The majority of com- 
panies showed moderate rates and a few showed small losses, the 
heaviest of which amounted to less than 3 per cent of the total in- 
vestment. Revisions for the 57 companies for 1918 produced a 
marked increase in the maximum rate of earnings for the group, but 
caused one company's percentage loss to be somewhat greater after 
revision than before. This company showed appreciation in invest- 
ment but none in costs. It operated at a loss for the year, which was 
the same before and after revision. Consequently, reducing its in- 
vestment by the amount of appreciation shown resulted in a higher 
percentage rate of loss. 

Rates of return on investment by groups. — A few of the 143 
companies reported very large earnings in each year, but the greater 
number reported only moderate earnings and a considerable number 



28 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



reported losses in each year. The actual distribution of the 143 com- 
panies in groups according to the reported and revised rates of 
return on investment is shown in Table 9. 



Table 9. — Percentages of production and investment and rates of return, as 
reported and as revised for l^S southern pine lumber companies, by profit 
groups, 1917 and 1918. 





Reported. 


Revised. 


Profit groups. 


Number 
of com- 
panies. 


Per cent 
of total 
produc- 
tion. 


Per cent 
of total 
invest- 
ment. 


Rate of 
return 
on in- 
vest- 
ment. 


Number 
of com- 
panies. 


Per cent 
of total 
produc- 
tion. 


Per cent 
of total 
invest- 
ment. 


Rate of 
return 
on in- 
vest- 
ment. 


1917. 
Loss 


6 
25 

44 
31 
17 
14 
6 


3.7 
18.1 
30.2 
19.3 
13.8 
10.9 

4.0 


4.7 
26.5 
33.9 
16.9 
10.4 
6.1 
1.5 


il.2 
3.1 
7.1 
12.7 
16.3 
23.3 
36.8 


5 
19 
39 
21 
26 
17 
16 


3.2 
12.2 
25.7 
12.1 
22.7 
11.9 
12.2 


4.3 
19.8 
30.1 
11.7 
19.6 
8.8 
5.7 


il.4 


Under 5 


3.1 


5 to 10 


6.8 


10 to 15 


12.9 


15 to 20 


16.4 


20 to 30 


23.9 


Over 30 


37.9 






All groups 


143 


100.0 


100.0 


9.0 


143 


100.0 


100.0 


11.6 






1918. 
Loss 


17 
28 
49 
20 
13 
13 
3 


7.0 
17.1 
35.6 
14.0 
10.9 
13.9 

1.5 


7.9 

21.2 

42.4 

12.0 

7.3 

8.6 

.6 


31.8 
2.9 
7.3 
11.9 
17.5 
22.8 
32.6 


15 
24 
35 
26 
19 
13 
11 


6.0 
15.7 
21.9 
19.7 
12.4 
15.3 

9.0 


7.1 
20.5 

25.8 
20.0 
10.5 
11.6 
4.4 


i'i.9 


Under 5 


3.2 


5tol0 


7.4 


10 to 15 


12.6 


15 to 20 


16.7 


20 to 30 


22.4 


Over 30 


35.8 






All groups 


143 


100.0 


100.0 


8.4 


143 


100.0 


100.0 


10.9 







1 Loss. 



In 1917, 6, and in 1918, 17 of the 143 companies reported small 
losses on their total business, but the revisions of the Commission 
reduced these to 5 and 15, respectively. In 1917, 75 companies, repre- 
senting 52 per cent of the production and about 65 per cent of 
the total investment, reported profits of less than 10 per cent on 
their total investment, while in the following year 94 companies, 
representing nearly 60 per cent of the total production and over 
71 per cent of the total investment, reported less than 10 per cent. 
Taking the 1917 revised figures, 63 companies, representing 41 per 
cent of the production and 54 per cent of the investment, realized 
less than 10 per cent on the investment, and for 1918 there were 
74 companies in this group with 43 per cent of the production and 
53 per cent of the investment. In both years the companies re- 
porting earnings greater than 30 per cent represented only a minor 
part of the total production and investment covered, amounting 
to only 4 per cent of the production and nearly 2 per cent of the 
investment in 1917 and a little over 1. per cent of the production 
and six-tenths of 1 per cent of the total investment in 1918. Taking 
the revised figures in 1917 there were 16 companies with 12 per 
cent of the production and about 6 per cent of the investment 
which realized over 30 per cent on the investment, and in 1918 
there were 11 companies with 9 per cent of the production and 
about 4 per cent of the investment which fell in this group. 



INVESTMENTS AND EARNINGS. 



29 



Companies grouped according to investment. — The total invest- 
ment of companies engaged in lumber manufacture varies greatly 
with the quantity of timber and timberland owned. Consequently 
two companies having practically the same production and earnings 
may have widely differing rates of return on their total investment. 
The following table shows the revised rates of return for 143 southern 
pine companies, grouped according to their respective total revised 
investments into 7 groups, as noted in the table. The results are 
shown for each of the three territorial groups as well as for all terri- 
torial groups combined. 

Table 10. — Rate of return for 1J/3 southern pine lumber companies, as revised 
by the Commission, by investment groups, 1917 and 1918. 



Investment groups. 



1917. 

Under $250,000 

$250,000 to $500,000 

$500,000 to $1,000,000 

$1,000,000 to $2,500,000- . . . 
$2,500,000 to $5,000,000. . . . 
$5,000,000 to $10,000,000. . . 
Over $10,000,000 

Average, all groups 

1918. 

Under $250,000 

$250,000 to $500,000 

$500,000 to $1,000,000 

$1,000,000 to $2,500,000. . . . 
$2,500,000 to $5,000,000. . . . 
$5,000,000 to $10,000,000. . . 
Over $10,000,000 

Average, all groups 



Gulf States 
group. 



Num- 
ber of 
com- 
panies. 



8 
11 
27 
45 
15 
7 
3 



116 



Rate of 
return 
on in- 
vest- 
ment. 



Per ct. 
22.3 
17.3 
16.3 
16.4 
12.2 
10.3 
5.9 



12.5 



Georgia-Florida 
group. 



Num- 
ber of 
com- 
panies. 



13 



7 
13 
29 
33 

24 



116 



8.0 
10.6 
12.8 
12.7 
13.3 
10.6 

7.7 



11.7 



13 



Rate of 

return 
on in- 
vest- 
ment. 



Per ct. 

12.8 

8.5 

9.4 



10.2 



9.8 



12.0 

11.3 

7.4 



10.9 



10.0 



Virginia-Caro- 
lina group. 



Num- 
ber of 
com- 
panies. 



14 



14 



Rate of 

return 
on in- 
vest- 
ment. 



Per ct. 
9.5 
7.5 
9.0 
6.7 
.9 
U.l 



2.1 



All groups. 



Num- 
ber of 
com- 
panies. 



14 
17 

36 
4G 
19 



143 



Rate of 
return 
on in- 
vest- 
ment. 



Per ct. 
18.0 
14.2 
14.7 
16.1 
10.7 
8.7 
5.9 



11.6 



3.1 
7.0 
5.5 
.9 
4.7 
1.3 



2.3 



14 
IS 
37 
35 

28 
9 
2 



143 



7.9 
10.3 
11.6 
11.8 
12.4 
9.3 
7.7 



10.9 



1 Loss. 

On account of the larger number of companies in the Gulf States 
the greatest significance attaches to the results for that territorial 
group and to the results for all territorial groups combined, as 
the number of companies in each size classification is in most cases 
sufficiently large to prevent one company with exceptionally high or 
exceptionally low earnings affecting unduly the averages. It is quite 
noticeable in both years that the companies of the Gulf States and 
Georgia-Florida groups realized rates of return on their total invest- 
ments that were on the average much larger than those of the Vir- 
ginia-Carolina group, and that they w T ere highest for the Gulf States 
group. 

The most striking feature brought out by the table for each terri- 
torial group is that the highest rates of return on investment were 
made by companies having small or medium-sized investments, while 
the smallest rates of return were made by the large companies. 
Companies having a very large investment, as a rule, have a larger 
proportion of their total investment in land and timber than those 
105332°— 22 4 



30 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



having a smaller investment, and therefore, as stated above, tend to 
show lower returns on investment. It is also quite noticeable that in 
1918 the rates of return for the companies having the smallest total 
investments (with the exception of the small companies of the 
Georgia-Florida group) generally decreased, while those of the com- 
panies having the largest investments generally increased. 

A study of the volume of production and sales for the 143 com- 
panies grouped according to their total investment indicates that the 
total sales for the smaller companies decreased in 1918 by larger per- 
centages than those of their larger competitors. Table 11 shows the 
percentage decreases in production and sales footages for the various 
investment groups. In this table the companies are grouped for both 
years according to their investments in 1917, in order to make the 
companies in each classification identical for both years. 

Table 11. — Percentage decrease in production and sales footages for 1918 com- 
pared with 1917, for 1^8 southern pine lumber companies, by groups, based on 
1917 investment, as revised by the Commission. 





Gulf States group. 


Georgia-Florida 
group. 


Virginia-Carolina 
group. 


All groups. 


Investment group. 


Num- 
ber of 
com- 
pa- 
nies. 


Percentage 
decrease. 


Num- 
ber of 
com- 
pa- 
nies. 


Percentage 
decrease. 


Num- 
ber of 
com- 
pa- 
nies. 


Percentage 
decrease. 


Num- 
ber of 
com- 
pa- 
nies. 


Percentage 
decrease. 




Pro- 
duc- 
tion. 


Sales. 


Pro- 
duc- 
tion. 


Sales. 


Pro- 
duc- 
tion. 


Sales. 


Pro- 
duc- 
tion. 


Sales^ 


Under $250,000 


8 
11 
27 
45 
15 
7 
3 


26.0 
20.3 
16.6 
16.8 
12.3 
9.9 
13.6 


22.5 
14.7 
13.3 
10.8 
7.0 
2.3 
13.3 


2 

4 
5 


U2.1 

13.6 
17.1 


16.5 

U3.7 

15.8 


4 
2 
4 
1 
2 
1 


28.2 
33.2 
32.3 
40.8 
12.7 
37.7 


25.0 
32.1 
31.7 
37.6 
16.8 
29.5 


14 
17 
36 
46 
19 
8 
3 


22.1 
16.3 
18.2 
17.2 
11.8 
13.1 
13.6 


19.7 


$250,000 to $500,000 

$500,000 to $1,000,000 

$1,000,000 to $2,500,000 


10.9 
15.4 
11.3 


$2, 500, 000 to $5, 000, 000 
$5,000,000 to $10,000,000 
Over $10,000,000 


2 


6.6 


12.3 


7.4 
5.5 








13.3 


















All groups 


116 14.8 


9.9 


13 


7.3 


2.0 


14 


27.8 


26.3 


143 


15. 3 in. 7 













1 Increase. 



For the 143 companies it is quite noticeable that the percentage 
decreases in both production and sales footages were greater for the 
small companies than for the large companies. For territorial 
groups it is quite noticeable that the Virginia-Carolina group showed 
a larger percentage decrease in both production and sales footage 
than either of the other groups. This tends to explain the marked 
decrease in rates of return on investment shown for the Virginia- 
Carolina group in Table 10. The smaller companies of the Georgia- 
Florida group, on the other hand, showed considerable increases in 
their total production and sales footages. These increases tend to 
explain why rates of return on investment did not decrease for com- 
panies in this group. (See Table 10.) 

Proportion of investment and earnings grouped according to 
volume or sales. — The quantity of lumber sold by the 143 companies 
for which complete cost and financial data were secured ranged, for 
individual companies, from 5,781,472 to 276,722,248 feet board meas- 
ure in 1917 and from 2,448,920 to 220,121,273 feet board measure in 



INVESTMENTS AND EARNINGS. 



31 



1918. In order to show the distribution of total quantities sold, 
investment, earnings, and rates of return on investment among large 
and small companies, the 143 companies have been grouped into five 
groups, based on volume of sales in feet for 1917 and 1918, as shown 
in Tables 12 and 13. Table 12 shows the percentage of the total num- 
ber of companies, total investment and total earnings falling in each 
size group. 

Table 12. — Percentages of total number of companies, total sales footage, total 
investment, and total earnings for 143 southern pine lumber companies, 
as revised by the Commission, grouped according to quantity of lumber sold, 
1917 and 1918. 



Quantity sold. 



Companies. 



Number. 



Per cent 
of total. 



Per cent 

of total 

sales 

footage. 



Per cent 
of total 
invest- 
ment. 



Per cent 
of total 
earnings. 



1917 

12,500,000 and under 

12,500,000 to 25,000,000 

25,000,000 to 50,000,000 

50,000,000 to 100,000,000 

Over 100,000,000 

Total 

1918 

12,500,000 and under 

12,500,000 to 25,000,000 

25,000,000 to 50,000,000 

50,000,000 to 100,000,000 

Over 100,000,000 

Total 



18 
47 
50 
20 



12.6 
32.8 
35.0 
14.0 
5.6 



3.1 
16.1 
33.1 
25.0 
22.7 



2.3 
12.4 
34.2 
25.7 
25.4 



143 



100.0 



100.0 



100.0 



1.9 

10. 
39.2 
25.3 
23.6 

100.0 



29 
50 
38 

20 
6 



20.2 
35.0 
26.6 
14.0 
4.2 



113 



100.0 



5.3 
18.7 
29.1 
28.2 
18.7 



3.9 
16.5 
31.2 
27.2 
21.2 



2.1 

12.5 
32.5 
31.0 
21.9 



100.0 



100.0 



100.0 



Nearly half of the 143 companies in 1917, and somewhat more than 
half in 1918, sold less than 25,000,000 feet of lumber each, while in 
both years practically four-fifths of the total number of companies 
included in the tabulations sold quantities not exceeding 50,000,000 
feet per company per annum. In both years four-fifths of the total 
number of companies sold less than 50,000,000 feet per annum, and 
their combined sales represented approximately 50 per cent of the 
total footage sold. About half of the remaining 50 per cent of the 
footage sold was reported by 20 companies reporting between 50,- 
000,000 and 100,000,000 feet board measure in both years. The 
remainder was covered by eight large companies in 1917 and six 
large companies in 1918, reporting sales amounting to over 100,000,000 
feet each. 

The percentages of companies were relatively high for the small 
company groups, while the percentages of total sales footage, 
total investment, and total earnings were greater for the large com- 
pany groups. Although there is a rather striking uniformity in the 
percentage distribution of total sales, total investment, and total 
earnings for each size group in both 1917 and 1918, the small com- 
pany groups show a relatively smaller proportion of total invest- 
ment and earnings than of sales footage, while the larger company 
groups show a somewhat greater proportion of total investment and 
earnings than of footage sold. 



32 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Table 13 shows the average sales footage, investment, and earnings 
per thousand feet of lumber sold and rates of return on investment 
for the 143 companies grouped exactly as in the preceding table. 

Table 13. — Average sales footages, average investments, and earnmgs per 
thousand feet sold, and rates of return on investment for 1J$ southern pine 
lumber companies, as revised by the Commission, grouped according to quan- 
tity sold, 1917 and 1918. 



Quantity sold. 



1917 

12,500,000 and under .... 
12,500,000 to 25,000.000. . 
25,000,000 to 50,000,000. . 
50,000,000 to 100,000,000. 
Over 100,000,000 

Total 

1918 

12,500,000 and under 

12,500,000 to 25,000,000.. 
25,000,000 to 50,000,000. . 
50,000,000 to 100,000,000 . 
Over 100,000,000 

Total 



Number 
of com- 
panies. 



143 



29 

50 

38 

20 

6 



143 



Average 
sales per 
company. 



Feet. 

9,102,195 

18,274,827 

35, 369, 668 

66, 638, 887 

151, 432, 765 



37, 311, 047 



8, 618, 286 

17, 847. 777 

36, 540, 336 

67, 090, 014 

148, 570, 615 



33, 315, 215 



Invest- 
ments per 
thou c and 
feet 
sold. 



$39. 75 
40.18 
53.86 
53.82 
58.36 



52.24 



45.18 
53.31 
65.05 
58.71 
68.72 



60.71 



Earnings 

per 
thousand 

feet 

sold. 



$3.70 
3.78 
7.15 
6.13 
6.29 



6.05 



2.66 
4.39 
7.35 
7.26 
7.74 



6.60 



Rate of 
return 
on invest- 
ment. 



Per cent. 

9.3 

9.4 

13.3 

11.4 

10.8 



11.6 



10.9 



The average sales per company for the different groups vary from 
slightly more than 9,000,000 feet board measure for the smallest 
group to over 151,000,000 feet for the largest group in 1917, and 
from slightly more than 8,600,000 feet for the smallest group to 
nearly 148,600,000 feet for the largest group in 1918. In general, 
taking quantity of sales as the basis of comparison, the companies 
with the smaller volume of sales showed lower earnings per thousand 
feet board measure than those having large sales, especially in 1918. 
Of the five groups shown, the middle group had the highest rate of 
earnings in 1917, while the next to the largest group had the highest 
rate in 1918. The average rate for the 143 companies was somewhat 
less in 1918 than in 1917. Although on the whole the companies 
selling the largest quantities of lumber realized greater profits per 
thousand feet sold than the small companies, the rates of return on 
investment for the large companies were not correspondingly greater 
on account of the larger investment. These larger investment figures 
are in the main due to larger investments in stumpage and to a less 
extent to plant and equipment and other investment figures. 

Section 3. Investment per thousand feet of lumber produced. 

Variation of investment with timber supply. — In the lumber in- 
dustry a large part of the investment of many firms represents stand- 
ing timber and timber lands. This is especial ly true of those firms 
having supplies of timber sufficient to last for a number of years. 
For a company having a timber supply sufficient for 15 yesLTS the pro- 
portion of total investment per unit of product represented by tim- 
ber and timber lands is considerably greater than that for a company 



INVESTMENTS AND EARNINGS. 33 

having a five-year supply. This situation is shown very well by the 
following tabulation of the total investments per thousand feet of 
lumber produced for 146 southern pine lumber producers based on 
the total investment at the end of 1917 and the production for the 
year 1917. 

In 1918 the production and distribution of southern pine lumber 
was under increasingly strict governmental regulation and the total 
cut of the companies reporting to the Commission was about 12 per 
cent less than in 1917, hence the year 1917 has been chosen as the 
more nearly normal of the two years for which data are available. 
In compiling the figures, the three broad territorial groupings pre- 
viously used have been retained. 

In many cases the reports did not segregate land and timber values 
or furnish plant or working capital investments in detail, hence the 
total investment shown in the balance sheets has been divided into 
land and timber, plant and equipment, and all other investments. 
The amount shown as " all other " investments is obtained by deduct- 
ing from the total investment shown in the balance sheet the amounts 
reported by the companies as representing the value of land and tim- 
ber, and plant and equipment. 

After this segregation was made the mills in each territorial group 
were arranged in four classes according to estimated length of opera- 
tions based on the log scale cut for the year 1917 and the timber 
stand in log scale owned as of December 31, 1917. The first clas- 
sification includes all companies owning timber sufficient to last five 
years or less, providing the rate of cut for the year 1917 were main- 
tained. The second classification includes companies having an 
owned supply of timber sufficient to last from 6 to 10 years; the third, 
companies having owned timber sufficient to last from 11 to 15 years; 
and the fourth, companies having over 15 years' supply. In the last- 
named group it was found that but one company had timber suffi- 
cient to last over 20 years. 

The investment per thousand feet of lumber produced is shown in 
Table 14. The figures shown in the table are obtained by dividing 
the total for each of the three items of investment named above by 
the total production in board measure for the year 1917. The 146 
companies included in the tabulation represent all companies report- 
ing investments and timber stands for the year in such form as to 
be usable in the tabulation. 

The reports indicate that if the 1917 rate of cut is maintained, and 
disregarding growth of timber, 73 companies, or exactly half of those 
included in the tabulation, would cut out their timber in five years or 
less, or by the end of 1922 ; 119 companies, or over four-fifths of the 
total, would cut out by the end of 1927 ; 137 companies, or more than 
nine-tenths of the total number of companies, would complete their 
cut by 1932; and but one company of the 146 would still be in opera- 
tion after 1937. It will be noted also that all of the 9 companies 
that in 1917 had over 15 years' timber supply were in the Gulf States 
group. As already stated, these calculations depend on taking the 
stands as reported and disregarding current growth, which can not 
be definitely determined. From this showing, therefore, it is not to 
be definitely concluded that all of the companies will complete their 
cut and cease production b}^ the dates given. The rate of cut may be 



34 



COSTS AND PKOFITS OF SOUTHERN PINE COMPANIES. 



lessened, thereby lengthening the life of the operations, or there may 
be standing timber adjacent to the mills that was not owned in 1917 
that may be bought or secured by lease. The fact remains, however, 
that southern pine, representing, according to the United States For- 
est Service in 1920, but 15 per cent of the softwood standing timber 
of the country can not long continue to supply, as it has been doing 
in the past few years, about 35 per cent of the total lumber produc- 
tion of the country. As the larger mills complete their cut they will 
be succeeded by smaller mills operating on isolated tracts or on sec- 
ond growth, so that the southern pine area will not until long after 
the dates mentioned cease to be an important lumber-producing re- 
gion. The results shown for these 146 companies that were repre- 
sentative commercial producers of lumber in 1917 merely emphasizes 
the growing need of a definite public reforestation policy to prevent 
the complete exhaustion of southern pine timber. 

Table 14. — Investment per thousand feet board measure of lumber produced, 
as revised by the Commission, for 146 southern pine lumber companies in 1917, 
classified according to life of operations based on timber owned and stumpage 
cut, by territorial groups. 





Num- 
ber of 
com- 
panies. 


Investment per thousand feet sawmill cut. 


Timber supply and terri- 
torial group. 


Total 
invest- 
ment. 


Land and timber. 


Plant and equip- 
ment. 


All other. 




Amount. 


Per cent 
of total. 


Amount. 


Per cent 
of total. 


Amount. 


Per cent 
of total. 


5 years and under: 

Gulf States 


59 
8 
6 


$37. 66 
32.90 
27.46 


$16. 89 
10.52 
12.06 


44.9 
31.9 
43.9 


$9.67 
9.86 
7.44 


25.7 
30.0 
27.1 


$11. 10 

12.52 

7.96 


29 4 


Georgia- Florida 


38 1 


Virginia-Carolina 


29 






Total 


73 


36.94 


16.30 


44.1 


9.59 


26.0 


11.05 


29.9 






6 to 10 years: 

Gulf States 


38 
3 
5 


53.31 
57.63 
76.58 


27.98 
35.90 
42.17 


52.5 
62.3 
55.1 


10.27 
10.42 
12.41 


19.3 
18.1 
16.2 


11.06 
11.31 
22.00 


28.2 


Georgia- Florida 


19.6 


Virginia-Carolina 


28.7 






Total 


46 


56.38 


30.06 


53.3 


10.54 


18.7 


15.78 


28.0 






11 to 15 years: 

Gulf States 


16 
1 
1 


80.21 
94.03 
56.30 


50.57 
58.65 
39.80 


63.0 
62.4 
70.7 


14.97 

20.00 

5.65 


18.7 
21.3 
10.0 


14.67 
15.38 
10.85 


18.3 


Georgia-Florida 


16.3 


Virginia-Carolina 


19.3 






Total 


18 


79.87 


50.14 


62.8 


15.08 


18.9 


14.65 


18.4 






Over 15 years: 

Gulf States 


9 


73.93 


53.18 


71.9 


12.10 


16.4 


8.65 


11.7 








































Total 


9 


73.93 


53.18 


71.9 


12.10 


16.4 


8.65 


11.7 






All companies: 

Gulf States 


122 
12 
12 


53.14 
48.46 
62.72 


29.14 
24.02 
34.03 


54.9 
49.6 
54.2 


11.02 
11.79 
10.84 


20.7 
24.3 
17.3 


12.98 
12.65 
17.85 


24.4 


Georgia-Florida 


26.1 


Virginia-Carolina 


28.5 






Total 


146 


53.53 


29.21 


54.6 


11.04 


20.6 


13.28 


24.8 







INVESTMENTS AND EARNINGS. 35 

In general the table shows marked increase in investment in land 
and timber as the estimated life of the operations increases, ranging 
from $16.30 for the group owning timber sufficient for 5 years or 
less to $53.18 for companies having over 15 years' supply. For all 
groups the average land and- timber investment amounted to $29.21 
per thousand feet of lumber produced in 1917. It will be noticed 
that the largest proportional investment in land and timber changes 
from one territorial group to another as the life of operations length- 
ens. In the five years and under the Gulf States group shows the 
largest proportional investment in land and timber, in the 6 to 10 year 
group the Georgia-Florida, and in the 11 to 15 year life the Virginia- 
Carolina group shows the largest. For all groups the largest propor- 
tional investment in land and timber shifts back to the Gulf States 
group. For investment in plant and equipment there is a closer uni- 
formity in each group. 

In terms of percentages of total investment, land and timber repre- 
sents a progressively increasing proportion varying from about 44 
per cent for the companies having a timber supply to last 5 years 
or less to approximately 72 per cent for the companies having in 
excess of 15 years' supply. The proportion represented by plant 
and equipment varies considerably from group to group, repre- 
senting on the average from about 26 per cent for the companies 
having the smallest timber supply to a little over 16 per cent for those 
having the largest supply. 

All figures discussed above are based on the revised investment and 
the production for the year 1917. Later years doubtless would show 
somewhat different results. Some of the companies included above 
would have completed their cut, others doubtless would show larger 
investments due to timber purchases or to writing up their timber 
accounts, while others that have neither added to their timber sup- 
ply by purchase, nor written up the value of their timber would 
show smaller total investments as their supply is cut out. Finally, 
any change in the quantity of lumber sawed from year to year would 
result in correspondingly increased or decreased investment per 
thousand feet produced in subsequent years. Consequently, the fig- 
ures shown above are not to be assumed to represent a constant figure 
for investment per thousand feet that may be applied to any year 
but the year for which they were computed. 

Earnings of companies grouped according to life of opera- 
tions. — Table 14 showed that the total investment per thousand 
feet of lumber produced increases with the amount of timber lands 
owned. Consequently, it may happen that two companies producing 
under otherwise similar conditions as to volume, cost, etc., and sell- 
ing at the same profit per thousand feet of lumber sold may show 
widely differing rates of return on investment because one has a 
relatively larger timber investment than the other. Table 15 shows 
for 1917 the average unit investments, unit profits, and rates of 
return for the 146 companies grouped according to their estimated 
length of operations based on stumpage owned and stumpage cut. 



36 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Table 15. — Investment and earnings per thousand feet and rates of return on 
investment in 1917 for 146 southern pine lumber companies, as revised by the 
Commission, classified according to life of operations based on timber owned 
and stumpage cut, by territorial groups. 



Timber supply and territorial group. 


Number 
of com- 
panies. 


Invest- 
ment per 
thousand. 


Earnings 

per 
thousand. 


Rate of 

return 

(per 

cent). 


5 years and under: 

Gulf States 


59 
8 
6 


$37.66 
32.90 
27.46 


$5.77 
2.74 
1.11 


15.3 


Georgia- Florida 


8.3 


Virginia-Carolina 


4.1 






Total 


73 


36.94 


5.39 


14.6 






6 to 10 years: 

Gulf States 


38 
3 
5 


53.31 
57.63 
76.58 


7.82 
7.98 
1.02 


14.7 


Georgia- Florida 


13.8 


Virginia-Carolina 


1.3 






Total 


46 


56.38 


7.00 


12.4 






11 to 15 years: 

Gulf States 


16 
1 
1 


80.21 
94.03 
56.30 


6.19 

4.84 
7.86 


7.7 


Georgia- Florida 


5. 1 


Virginia-Carolina 


14.0 






Total 


18 


79.87 


6.15 


7.7 






Over 15 years: 

Gulf States 


9 


73.93 


7.01 


9.5 


Georgia- Florida 




Virginia-Carolina 




















Total 


9 


73.93 


7.01 


9.5 






All groups: 

Gulf States 


122 
12 
12 


53.14 
48.46 
62.72 


6.62 
4.68 
1.29 


12.5 


Georgia- Florida 


9.7 


Virginia-Carolina 


2.0 






Total 


146 


53.53 


6.18 


11.6 







The 73 companies in the group having timber supplies to last 
five years or less showed the smallest average earnings per thousand 
feet of lumber produced but the highest average rate of return 
on total investment. The most trustworthy comparisons, how- 
ever, appear to be those drawn from the Gulf States group, for 
which this same relationship is found as to the companies with the 
smallest timber supply. 



Chapter IV. 
UNIT COSTS, SALES REALIZATION, AND PROFITS. 

Section 1. Cost methods and production covered. 

The problem of lumber costs. — The sawmill takes a log and di- 
vides it into a number of marketable sizes and grades of lumber and 
has left a quantity of low grades and short lengths that are rework- 
able in the production of lath, shingles, box shooks, firewood, kin- 
dling, etc. In the cost accounts of southern pine mills the logs manu- 
factured are charged to manufacturing at a uniform cost per thou- 
sand feet, so that the initial cost of different parts of a given log 
finding their way into different grades of lumber is the same for both 
high and low grades and by-products. Furthermore, each manu- 
facturing process produces various grades of each size at identical 
cost per thousand feet for both high and low grades. Average 
stumpage, logging, and manufacturing costs are easily obtainable. 
The average cost of producing a given size finished in a given man- 
ner may be ascertained if sufficiently detailed mill records are kept. 
For the various grades produced of any given size, however, there 
are no differences either in cost of stumpage as handled by manu- 
facturers of southern pine, or in subsequent mill processes that dif- 
ferentiate the costs of high grades from those' of low grades of any 
size finished in a given manner. Consequently, detailed cost com- 
parisons by sizes and grades can not be made from the data reported 
by manufacturers. 

Discussion restricted to averages. — In the absence of costs by 
sizes and grades it is necessary to confine the ensuing discussion to 
average costs, average selling prices, and average profits per thou- 
sand feet of lumber sold, regardless of size or grade. In a number of 
cases, owing to lack of complete information, it has been necessary 
to use different footages without corresponding inventory adjust- 
ments in the computation of costs. From a study of the costs of cer- 
tain companies, which could be computed both with and without 
inventory adjustments, it appears that the error in costs as reported 
due to lack of inventories is small, probably not more than 1 or 2 
per cent for southern pine mills as a group. The statistics shown 
reflect the general condition of the southern pine industry as a whole 
during the period covered. 

Number and grouping of companies. — A total of 205 producing 
companies returned usable reports showing average costs of mill-run 
lumber. The preceding chapter discusses the investments and profits 
of 143 of these 205 companies that returned usable financial data 
for both years. In this chapter the average costs of the 205 compa- 
nies are discussed as reported by the companies, and in addition the 
costs for the 143 companies whose investments and profits are dis- 
cussed in Chapter III are shown both before and after revision for 
appreciation in stumpage. 

37 



38 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



The unit costs, prices, and profits of the 205 producing companies 
are discussed first. These reports were not revised to eliminate ex- 
cess depletion on account of appreciation of stumpage, because the 
data for such revision were too incomplete for many of the com- 
panies. 

These 205 companies returned a total of 218 reports covering the 
costs, sales, realization, and profits from lumber and other sources 
for 236 individual mills. In some cases the companies owning two or 
more mills returned consolidated reports for all of their mills. In 
others, companies owning two or more mills returned a separate 
report for each mill. In the computation of unit costs, prices, and 
profits it might be desirable to use the individual mill as the pro- 
ducing unit. Since, however, it was impossible from data at hand 
to segregate the costs of individual mills in the consolidated cost 
reports, while it was possible to combine the mills owned by a single 
company to form a consolidated company report, the latter course 
has been pursued, and the unit costs, prices, and profits of the 205 
companies are made the basis for discussion. The discussion of the 
unit costs, sales realization, and profits, for the 143 companies as re- 
ported and as revised by the Commission is taken up in the last part 
of this chapter. 

Production covered. — The following table shows the production 
of southern pine and number of mills operated by the 205 companies 
covered in this report in comparison with the total production of 
southern pine lumber and number of mills operating as reported 
by the United States Forest Service for the years 1917 and 1918. 

Table 16. — Total production of southern pine lumber and quantity and per- 
centage of total covered in costs, by territorial groups, 1917 and 1918. 





Total southern pine. 1 


Covered by Federal Trade Commission. 


Group. 


Number 
of mills. 


Production*, 


Number 
of mills. 


Production. 


Percentage of total. 




Number 
of mills. 


Produc- 
tion. 


1917. 
Gulf States 


2,221 

801 

2,506 


Feet. 
8, 756, 449, 000 
1, 493, 966, 000 
2, 085, 459, 000 


182 
24 
30 


Feet. 
5, 551, 767, 449 
445,729,641 
608,311,984 


8.2 
3.0 
1.2 


63.4 


Georgia- Florida 


29.8 


Virginia-Carolina 


29.2 






Total 


5,528 


12, 335, 874, 000 


236 


6,605,809,074 


4.3 


53.5 






1918. 
Gulf States 


1,892 

649 

2,177 


7, 035, 283, 000 
1,118,594,000 
1, 652, 578, 000 


182 
24 
30 


4,708,162,562 
391,603,393 
443, 142, 267 


9.6 
3.7 
1.4 


66.9 


Georgia- Florida 


35.0 


Virginia-Carolina 


26.8 






Total 


4,718 


9, 806, 455, 000 


236 


5, 542, 908, 222 


5.0 


56.5 







1 U. S. Department of Agriculture, Forest Service, "Production of Lumber, Lath and Shingles," 1917, 
p. 16, and 1918, p. 19. 

It will be noticed that while the proportion of production covered 
by this report in 1917 was about 54 per cent, the number of mills was 
only about 4 per cent. For different territorial groups the propor- 
tion covered varied from 29 to 63 per cent in 1917, and the propor- 
tion of mills varied from about 1 to 8 per cent of the Forest Service 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



39 



totals. In 1918 the proportion of production covered was about 57 
per cent and varied from 27 to 67 per cent for the different groups, 
while the number of mills operated by companies reporting to the 
Commission varied from a little over 1 to almost 10 per cent of the 
Forest Service totals. This shows that the production not covered by 
the Commission represented that of a great number of small mills, 
many of which had very inadequate accounting records and were 
therefore unable to furnish the data requested in the Commission's 
schedules. 

Volume of sales. — Table 17 shows the total sales of the 205 com- 
panies for 1917 and 1918 grouped exactly as in the preceding table. 

Table 17. — Quantities of lumber sold by 205 southern pine lumber companies, 

by territorial groups, 1917 and 1918. 



Group. 


Number 
of com- 
panies. 


Quantity. 


Per cent 


1917 


1918 


in 1918. 


Gulf States 


156 
24 
25 


Fed. 
5, 702, 619, 348 
431, 915, 963 
626, 750, 634 


Fed. 
5, 100, 593, 056 
391, 996, 592 
468, 534, 043 


10.6 


Georgia-Florida 


9.2 


Virginia-Carolina 


25.2 






Total 


205 


6, 761, 285, 945 


5, 961, 123, 691 


11.8 







The quantity of lumber sold, like the quantity produced, showed a 
marked decrease in volume in 1918 as compared with 1917, varying 
from 9 per cent to 25 per cent for the different groups and amount- 
ing to nearly 12 per cent for the 205 companies. In both years the 
sales reported were greater than the production, as will be noted by 
comparing Tables 16 and 17. The total sales realization, however, 
increased about 13 per cent for all groups, the percentage increases 
for different groups ranging from about 7 per cent for the Virginia- 
Carolina group to about 16 per cent for the Georgia-Florida group. 
(See Table 41, p. 81.) 

Average size of companies. — Much of the virgin stand of southern 
pine, particularly in the South Atlantic States, has already been or 
is rapidly being cut out. As the best timber is exhausted, large mills 
are dismantled and are replaced or superseded by smaller ones work- 
ing on small isolated areas of virgin timber and second growth. 
Consequently there is considerable variation in the size of mills 
operating in different parts of the southern pine belt, the larger 
being in the Gulf States and the smaller ones in the Atlantic Coast 
States. Table 18 shows the average production by States for the 205 
companies covered in this report. 

The companies located in Oklahoma, Louisiana, and Texas re- 
ported the largest, and those of North Carolina the smallest aver- 
age production per mill in each year. In general the average pro- 
duction per company in the western end of the southern pine area 
is from one and a half to two times as large as that of companies 
in the Atlantic Coast States. 



40 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Table 18. — Average production per company for 205 southern pine lumber 
companies, by States and groups of States, 1917 and 1918. 





Number 
of com- 
panies. 


1917 


1918 


State and group. 


Total produc- 
tion. 


Production 
per company. 


Total produc- 
tion. 


Production 
per company. 


Alabama 


23 

18 
48 
38 
2 
27 


Feet. 
461, 168, 310 
569, 102, 058 
2, 348, 604, 768 
1, 083, 003, 464 
137, 670, 210 
952, 218, 639 


Feet. 

20, 050, 796 
31, 616, 781 
48, 929, 266 
28, 500, 091 
68, 835, 105 
35, 267', 357 


Feet. 
350, 561, 762 
470,927,498 
2, 048, 718, 566 
922, 699, 714 
100, 344, 651 
814,910,371 


Feet. 
15, 241, 816 


Arkansas 


26,162,639 


Louisiana 


42,681,637 


Mississippi 


24, 281, 571 


Oklahoma 


50, 172 325 


Texas 


30, 181, 86& 






Total Gulf States 


156 


5, 551, 767, 449 


35, 588, 253 


4, 708, 162, 562 


30, 180, 529 






Florida 


17 
7 


343, 361, 429 
102, 368, 212 


20, 197, 731 
14,624,030 


304, 215, 891 
87, 387, 502 


17, 895, 052 


Georgia 


12, 483, 929 








24 


445, 729, 641 


18, 572, 068 


391, 603, 393 


16, 316, 808 


North Carolina 


7 
10 

8 


73, 465, 809 
208, 876, 528 
325, 969, 647 


10,495,115 
20, 887, 653 
40, 746, 206 


55, 933, 854 
145, 834, 743 
241,373,670 


7, 990, 551 


South Carolina 


14, 583, 474 


Virginia 


30, 171, 709 






Total Virginia-Carolina 


25 


608.311,984 


24,332,479 


443,142,267 


17, 725, 690 


Total 


205 


6,605,809,074 


32, 223, 459 


5, 542, 908, 222 


27, 038, 577 





Section 2. Unit costs, sales realization, and profits, 205 companies. 

Cost of sales, sales realization, and earnings per thousand feet 
board measure. — Table 19 shows the average cost of sales, sales 
realization, and earnings per thousand feet board measure as re- 
ported by the 205 companies whose production is discussed above. 
Three territorial groupings are shown, which are identical with the 
subgroups shown in the preceding tables. The unit figures are based 
on the quantities and total costs shown in Exhibit 4, page 74. 

Table 19. — Average cost of sales, sales realization, and earnings per thousand 
feet, as reported by 205 southern pine lumber companies, by territorial groups, 
1911 and 1918. 



Group 


Number 
of com- 
panies. 


Cost of 
sales. 


Sales 
realiza- 
tion. 


Net 
earnings 

on 
lumber. 


Famings 
fmm 
other 

sources. 


Earnings 
on entire 
business. 


1917. 
Gulf States * 


156 
24 
25 


$16.44 
17.45 
18.91 


$20.88 
20.08 
20.29 


$4.44 
2.63 
1.38 


$0.92 
.58 
.44 


$5.36 


Georgia-Florida 2 


3.21 


Virginia-Carolina 3 


1.82 






All groups 


205 


16.73 


20.77 


4.04 


.85 


4.89 






1918. 
Gulf States 


156 
24 

25 


21.87 
22.99 
28.18 


26.49 
25.73 
29.13 


4.62 

2.74 

.95 


1.03 

.57 
.45 


5.65 


Georgia-Florida 


3.31 


Virginia-Carolina 


1.40 






All groups 


205 


22.44 


26.65 


4.21 


.95 


5.16 







1 Includes Alabama, Arkansas, Louisiana, Mississippi, Oklahoma, and Texas. 

2 Includes Florida and Georgia. 

3 Includes North Carolina, South Carolina, and Virginia. 



The cost of sales shown above includes the total reported cost of 
stumpage, logging, manufacturing, general and administrative ex- 
penses, selling and shipping expenses, less net income from by-products, 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 41 

the production of which is not treated as a separate operation, and 
the material or other costs of which are included in logging, sawmill, 
or other lumber-manufacturing operations. 

The sales realizations shown are the net sales reported after de- 
ducting discounts, returns, allowances, and freight paid. 

Xet earnings on lumber shown in the table represent the difference 
between the realization per thousand feet and the cost of sales per 
thousand. It is to be noted that for those companies that failed to 
keep by-products costs separately from lumber costs the effect of de- 
ducting income from by-products from lumber costs is to cause any 
profit realized from by-products to be included in profit from lumber. 
This applies to the results for approximately 40 per cent of the com- 
panies. In general, the income per thousand feet from by-products 
was small when spread over the total production of all companies, 
amounting to but 11 cents per thousand feet of lumber produced in 
1917 and 12 cents per thousand in 1918. (See Table 22, p. 45.) These 
small amounts represent net income from by-products which may be 
more than or less than the cost of by-products sold. Consequently 
the error in average net earnings on lumber for all companies intro- 
duced by their handling by-products in this way for 40 per cent of 
the companies covered is very small, if not negligible. 

Earnings from other sources represent income derived from such 
sources as commissaries, farms, cut-over lands, light and power 
plants, tenements, stocks and bonds owned, common carrier earnings 
of owned logging railroads, profits on the sale of capital assets and 
for some companies income from by-products (laths, shingles, and 
shooks, turpentine, and rosin) the production costs of which were 
not reported as part of costs of lumber. 

Average costs, sales realization, and earnings. — Average cost of 
sales and average sales realization for all companies and for the 
different groups of companies showed marked increases in 1918 over 
1917. The highest cost of sales in both years is shown for the Vir- 
ginia-Carolina group. The largest percentage increases in both cost 
of sales and sales realization is likewise shown for the same group. 

The average net earnings per thousand on lumber for all companies 
and for the Gulf States and Georgia-Florida groups showed a slight 
increase, but the earnings of the Virginia-Carolina group (in both 
years the lowest of the three groups) decreased from $1.38 per thou- 
sand in 1917 to $0.95 per thousand in 1918, a decrease of 31 per cent. 
Average earnings per thousand from other sources showed an in- 
crease for all groups in 1918. Average total earnings, including 
earnings from lumber and other sources, also increased, being on the 
average for all companies over 5 per cent higher in 1918 than in 1917, 
notwithstanding the fact that the Virginia-Carolina group showed a 
decrease of 23 per cent in their total earnings. 

Interest, income and excess profits taxes. — In the schedules all 
interest and income and excess profits taxes were excluded from 
costs. This method of reporting interest eliminates factitious cost 
showings and puts all companies on the same basis by eliminating the 
question as to whether a company owns or borrows its capital and 
makes the main consideration a fair return on capital employed re- 
gardless of the method of capitalization. Income and excess profits 
taxes, as their names imply, are levied on and payable from income 
and were therefore excluded from cost in the schedules. These items 



42 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



are payable out of earnings before the final distribution of profits 
in the form of dividends or profits carried to surplus. 

The amount of these items for the year 1917 ranged from $0.86 to 
$1 per thousand feet board measure for the different groups and 
averaged $0.97 for all three groups. For 1918 the amounts increased 
for every group, ranging from $1.23 to $1.41 for different groups 
and averaging $1.38 for all groups. After the payment of interest, 
and income and excess profits taxes, the profit remaining decreased 
slightly for all groups from an average of $3.92 per thousand for 
the vear 1917 to $3.78 per thousand for 1918. (Table 38, p. 75.) 

B&GH AND LOW COSTS, SALES REALIZATION, AND PROFITS FOR INDI- 
VIDUAL companies. — The preceding discussion of unit costs, sales 
realization, and profits was based entirely on average figures, no men- 
tion being made of the ranges in items included in the averages. 
Table 20 shows the high and low for each of the items shown in Table 
19 for the 205 companies. Each of the figures shown is the highest or 
the lowest figure, as the case may be, for an individual company for 
each of the items. 

Table 20.- — High and low cost of sales, sales realization, net earnings on lumber, 
earnings from other sources, and total earnings per thousand feet board 
measure, as reported by 205 southern pine lumber companies, by territorial 
groups, 1911 and 1918. 



Group. 


Num- 
ber of 
com- 
pa- 
nies. 


Cost of sales. 


Sales 
realization. 


Net earnings 
on lumber. 


Earnings 

from other 

sources. 


Total 
earnings. 




High. 


Low. 


High. 


Low. 


High. 


Low. 


High. 


Low. 


High. 


Low. 


1917. 
Gulf States 


156 
24 
25 


$23.45 
23.03 
22.40 


$12.32 
13.20 
13.01 


$25. 33 
24.60 
25.67 


$15. 31 
15.10 
16.93 


$9.80 
7.03 
5.91 


i $2. 72 

1.94 

M.35 


2 $14.02 
1.66 
2.35 


i $1. 34 

12.12 

1.96 


2 $16.57 
8.69 
7.12 


i $1. 21 


Georgia-Florida 

Virginia-Carolina 


1.64 
M.35 


All groups 


205 


23.45 


12.32 


25.67 


15.10 


9.80 


14.35 2 14.02 


12.12 


2 16. 57 


14.35 


1918. 
Gulf States 


156 
24 
25 


29.91 
31.30 
37.12 


15.63 

16.85 

, 23.23 


34.64 
36.08 
36.28 


19.61 
18.81 
21.83 


13.79 

8.58 
5.74 


i 4. 85 2 14. 36 
i 3. 55 2. 00 
14.36 4.09 


13.50 
1.94 

1.77 


2 18. 16 
9.35 
5.80 


M.85 


Georgia-Florida 

Virginia-Carolina 


13.00 
14.36 


All groups 


205 


37.12 


15.63 


36.28 


18.81 


13.79 


i 4. 85 2 14. 36 


13.50 


2 18. 16 


14.85 



1 Loss. 

2 One company operating four mills reported costs and income in detail for one mill 
only, but included net earnings from the other three mills as " earnings from other 
sources." 

There is a wide spread between the highest and the lowest average 
cost of sales and sales realization shown by individual companies due 
to different grades of timber, different operating conditions, dif- 
ferent sizes and grades of lumber produced, etc. Since lumber is 
produced at widely differing costs and sold at different prices ac- 
cording to grade and finish considerable range in profit per thousand 
feet naturally follows. Some companies in each group in each year 
sold their lumber at a loss, at least as compared with average cost of 
production, while others made large earnings per thousand feet. 
Similarly for earnings from other sources, some companies show 
profit and others losses in every group. It sometimes happens that 
a small profit on lumber is more than balanced by a loss from other 
sources, or a loss on lumber is turned into gain in total earnings. 
Nevertheless, some companies in every group carried on their total 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



43 



operations, including lumber and other operations, at a loss, while 
other companies show profits of varying amounts. In both 1917 and 
1918 the Virginia-Carolina group showed the smallest maximum 
earnings as well as the largest loss per thousand, while the largest 
earnings and the smallest loss was for companies in the Gulf States 
group. 

Costs and earnings by size of companies. — A study of cost of sales 
and earnings per thousand for the 205 companies arranged according 
to volume of sales indicates that the smallest companies realized the 
smallest earnings per thousand feet. For this study the companies of 
each of the three territorial groups have been ranked according to 
their respective sales footages into five groups, as shown in Table 21, 
and Exhibit 7, page 81. 

Table 21. — Costs and earnings per thousand feet as reported by 205 southern 
pine lumber companies, according to quantity sold and by territorial groups, 
1911 and 1918. 



Quantity sold. 



1917 



Per cent 
of total 

sales 
footage. 



Cost of 
sales. 



Earnings 

on 
lumber. 



1918 



Per cent 
of total 

sales 
footage. 



Cost of 
sales. 



Earnings 

on 
lumber. 



Gulf States: 

Under 12,500,000 

12, 500, 000 to 25, 000, 000. 
25,000,000 to 50,000,000. . 
50,000,000 to 100,000,000. 
Over 100,000,000 



2.3 
13.8 
31.3 
19.0 
17.9 



$17. 31 
17.28 
16.36 
15.97 
16.28 



$3.57 
2.80 
4.64 
5.29 
4.59 



4.3 
17.7 
26.2 
22.4 
15.0 



$23. 78 
22.72 
21.52 
21.35 
21.73 



$0.88 
3.13 
5.01 
5.55 
5.35 



Total. 



84.3 



Georgia-Florida: 

Under 12,500,000 

12,500,000 to 25,000,000. . 
25,000,000 to 50,000.000. . 
50,000,000 to 100,000,000. 
Over 100,000,000 



1.2 
2.9 
2.3 



Total. 



6.4 



Virginia-Carolina: 

Under 12,500,000 

12,500,000 to 25,000,000. . 
25,000,000 to 50,000,000. . 
50,000,000 to 100,000,000. 
Over 100,000,000 



.7 
2.4 
1.8 
4.4 



Total. 



9.3 



All groups: 

Under 12,500,000 

12,500,000 to 25,000,000. . 
25,000,000 to 50,000,000. . 
50,000,000 to 100,000,000. 
Over 100,000,000 



4.2 
19.1 
35.4 
23.4 
17.9 



Total . 



100.0 



16.44 



4.44 



85.6 



21.87 



4.62 



16.90 
18.00 
17.07 



1.57 
1.52 
4.52 



1.9 
1.8 
2.1 



23.46 
22.86 
24.15 
19.30 



2.61 
1.03 
1.95 

8.58 



17.45 



2.63 



22.99 



2.74 



17.08 
19.25 
17.07 
19.73 



1.95 

1.90 

2.59 

.52 



18.91 



1.38 



17.16 
17.64 
16.45 
16.68 
16.28 



2.75 
2.49 
4.53 
4.39 
4.59 



16.73 



4.04 



1.7 
1.9 
1.2 
3.0 



28.28 
29.08 
29.00 
27.25 



.97 

.20 

3.51 

.35 



7.8 



28.18 



,95 



7.9 
21.4 
29.5 
26.2 
15.0 



24.66 
23.29 
22.02 
21.98 
21.73 



1.32 
2.70 
4.73 
5.04 
5.35 



100.0 



22.44 



4.21 



Note.— More and complete data regarding this table will be found in Exhibit 7, p. 81. 

Of the 205 companies, 156, or over three-fourths of the total num- 
ber, were located in the States of Alabama, Arkansas, Louisiana, 
Mississippi, Oklahoma, and Texas, comprising the Gulf States group. 
These 156 companies reported approximately seven-eighths of the 
total quantity of lumber sold in each year. The remaining com- 
panies were about equally divided between the Georgia-Florida and 
Virginia-Carolina groups. The 24 companies of Georgia and 
Florida, representing approximately one-eighth of the total number 



44 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

of companies, reported about one-fifteenth of the total quantity sold 
in both years, while the 25 companies of the Virginia-Carolina group, 
also representing about one-eighth of the total number of companies, 
reported about one-eleventh of the total quantity sold in 1917 and 
about one-thirteenth in 1918. 

All of the companies selling over 100,000,000 feet board measure 
and all but four of the companies selling between 50,000,000 and 
100,000,000 feet were in the Gulf States group. Less than one-fifth 
of the total number of companies in the Gulf States group sold less 
than 12,500,000 feet in either year, while for each of the other groups 
about one-third of the companies in 1917 and one-half in 1918 sold 
less than that quantity. The net profits realized on lumber by the 
small companies of the Gulf States group were very much larger 
than those of the small companies of the Georgia-Florida and Vir- 
ginia-Carolina groups in 1917, but were smaller in 1918. Owing to 
the larger earnings of its large companies in both years the average 
profit per thousand of the Gulf States group, amounting to $4.44 in 
1917 and $4.62 in 1918, were nearly 70 per cent greater than those of 
the Georgia-Florida group in both years, and about two and one- 
half times greater in 1917 and nearly five times greater in 1918 than 
those of the Virginia-Carolina group. The larger earnings of the 
Gulf States group in 1917 were due to somewhat lower average cost 
of sales and slightly larger average sales realization. In 1918 the 
average cost of sales for the Gulf States group was less than that of 
either of the other two groups, but the average sales realization of 
the Virginia- Carolina group was materially greater than that of 
either of the other groups. The last-named group, however, had such 
a high average cost of sales that its average earnings per thousand on 
lumber were the smallest shown for any group in either year. 

In the Georgia-Florida and Virginia- Carolina groups the num- 
ber of companies in each of the different size classifications was so 
small that exceptionally high or low figures for a single company 
materially affect the results for each of the various size-groups. For 
the Gulf States group the highest cost of sales and the lowest earnings 
per thousand feet in each year were shown by the smaller groups of 
companies. 

In both years over 50 per cent of the total sales reported by the 205 
companies comprising the three territorial groups were reported by 
companies selling between 12,500,000 and 50,000,000 board feet 
annually. Comparatively few companies selling over 50,000,000 
feet board measure annually reported a relatively large proportion 
of the total lumber sales. These large companies generally produced 
lumber at a somewhat lower cost per thousand feet than their smaller 
competitors and sold their product at somewhat higher prices in 
both years, thereby realizing higher earnings per thousand. In gen- 
eral also the larger companies showed larger earnings from other 
sources, and consequently a wider range in earnings per thousand 
from their entire business than the smaller companies. As already 
shown, however (see p. 29), the smaller companies generally showed 
a higher rate of return on investment. 

Unit production and selling costs. — The subject of unit lumber 
production costs may be approached either from the point of view 
of production costs by operations such as logging, mill cost, gen- 
eral and administrative, shipping and selling expense, or it may be 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



45 



approached from the point of view of analyzing and assembling the 
various elements of cost, such as labor, materials and supplies, and 
overhead expense, which constitute the total cost of sales. 

The cost schedules used by the Commission in its war-time cost 
work called for departmental costs and production in considerable 
detail. Most companies were able to report their departmental ex- 
penditures at least in total, but many were unable to report analyses 
of these totals according to the schedules. In general, the amount 
columns of the schedules were filled in detail much more completely 
than the columns provided for departmental production quantities 
and inventory footages and amounts. Failure to report production 
and inventories by departments was due to the fact that the records 
of many of the companies were not kept in such a way as to yield the 
figures requested. 

Average costs. — Since detailed analyses of cost figures by depart- 
ments were lacking in many schedules, it is possible to present costs 
for the 205 companies discussed above subdivided to show only 
stumpage, logging, manufacturing, general and administrative, 
snipping, and selling. In the computation of these reported 
costs, lack of departmental production quantities and departmental 
inventory footages and amounts makes it necessary to use different 
quantities as divisors in computing costs of different items as de- 
scribed in Exhibit 5, page 76. Consequently, the average figures for 
total cost to produce and sell, obtained by adding 4 together the aver- 
age departmental costs shown in Table 22, are only approximately 
correct. At best the departmental costs shown represent only the 
cost of producing a certain number of feet board measure of logs 
and of sawing and marketing a certain quantity of lumber during 
the year. The quantity logged may be greater or less than the 
quantity of lumber sawed, and the quantity of lumber sold may 
likewise differ from the quantity of lumber sawed. A study of cer- 
tain companies for which costs could be accurately computed by de- 
partments indicates that the error in total cost, as shown in the table, 
due to omitting inventory adjustments, is probably not more than 2 
per cent. ♦ 

Table 22. — Average cost per thousand feet of producing and selling southern 
pine (mill-run) lumber and timbers, as reported by 205 southern pine lumber 
companies, by territorial groups, 1911 and 1918. 



Year and group. 


Num- 
ber of 
com- 
panies. 


Stump- 
age. 


Log- 
ging- 


Manu- 
factur- 
ing. 


General 

and 
admin- 

istra- . 

tive. 


Ship- 
ping. 


Selling. 


Total. 


Less 
by- 
prod- 
uct. 


Net 
cost to 
produce 

and 

sell. 


1917. 
Gulf States 


156 
24 
25 


$4.66 
4.19 
3.29 


$4.44 

5.53 

. 6.67 


$4.48 
5.15 
6.23 


$2.31 
2.04 
2.65 


$0.48 
.34 
.32 


$0.55 
.49 
.63 


$16.92 
17.74 
19.79 


$0.10 
.30 
.16 


$16. 82 


Georgia- Florida 

Virginia-Carolina 


17.44 
19.63 


All companies. 


205 


4.50 


4.72 


4.69 


2.32 


.46 


.55 


17.24 


.11 


17.13 


1918. 
Gulf States 


156 
24 
25 


5.06 
4.34 
3.66 


6.55 

8.05 
10.68 


6.78 
7.28 
9.58 


3.07 
2.64 
4.25 


.68 
.54 
.51 


.69 
• .53 

.78 


22.83 
23.38 
29.46 


.09 
.38 
.27 


22.74 


Georgia- Florida 

Virginia-Carolina . . . 


23.00 
29.19 


All companies. 


205 


4.90 


6. 98 1 7. 04 1 3. 13 

1 


.66 


.68 


23.39 


.12 


23.27 



105332°— 22- 



46 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



The average reported cost of every item shown in Table 22 in- 
creased in 1918 as compared with the previous year. Total cost to 
produce and sell for all companies was nearly 36 per cent greater in 
1918 than in the previous year. This increase in average cost includes 
increases in different items, as follows: Stumpage, 9 per cent; log- 
ging, 48 per cent; manufacturing expense, 50 per cent; general and 
administrative expense, 35 per cent; shipping expense, 44 per cent; 
and selling expense, 24 per cent. As explained below, the increase 
in stumpage which is given unrevised was due in part to apprecia- 
tion of stumpage investment. The deduction for by-products is 
necessary, because about 40 per cent of the companies do not segregate 
the cost of by-products, such as laths, shingles, shooks, etc., from 
their lumber costs, hence the total cost of mill-run lumber has been 
reduced by the amount of net income from by-products realized by 
the companies including by-products costs in their lumber costs. Al- 
though this item was considerable for certain of the 40 per cent of com- 
panies reporting it, when averaged over the total production of the 
205 companies, the deduction amounted to but 11 cents per thousand 
feet board measure in 1917 and 12 cents in 1918. 

Considerable variation appears in the percentage increases of cer- 
tain items for the different territorial groupings of companies, the 
largest increases both in amounts and percentages generally being 
shown for the Virginia-Carolina group. 

High and low costs. — The previous table and discussion does not 
show the wide ranges in individual company costs included in the 
averages. The following table shows the highest and lowest costs for 
the 205 companies. The groupings shown are the same as those in 
Table 22. 

Table 23. — High and low average costs per thousand feet to produce and sell 
southern pine lumber, as reported by 205 southern pine lumber companies, by 
territorial groups, 1917 and 1918. 



Item. 


Gulf States. 


Georgia- 
Florida. 


Virginia- 
Carolina. 


All groups. 




1917 


1918 


1917 


1918 


1917 


1918 


1917 


1918 


Stumpage: 

High 


$9.07 
1.60 

11.15 
1.83 

9.96 
2.44 

6.87 
.69 

14.56 
.09 

1.79 
.01 

25.24 
12.53 


$9.45 
.79 

15.32 
3.09 

13.55 
3.79 

7.85 
.71 

14.51 
.06 

2.21 
.01 

35.92 
16.30 


$10.00 
1.54 

10.63 
3.03 

10.11 
3.24 

3.68 
.39 

1.10 
.32 

1.96 
.02 

25.27 
13.21 


$8.36 
2.18 

13.37 
4.69 

13.16 
3.76 

6.59 
1.20 

1.55 

.39 

1.75 

.03 

36.54 
16.86 


$6.00 
2.29 

10.98 
3.41 

9.75 
3.95 

7.03 
1.25 

1.67 
.33 

1.63 
.01 

24.15 
15.20 


$6.99 
2.50 

17.42 
6.67 

13.66 
5.93 

9.30 
2.36 

2.69 
.32 

2.08 
.03 

38.18 
24.03 


$10.00 
1.54 

11.15 
1.83 

10.11 
2.44 

7.03 
.39 

14.56 
.09 

1.96 
.01 

25.27 
12.53 


$9.45 


Low 


.79 


Logging: 

High 


17.42 


Low 


3.09 


Manufacturing: 

High 


13.66 


Low 


3.76 


General and administrative: 

High 


9.30 




.71 


Shipping: 

High 


14.51 


Low 


.06 


Selling: 

High 


2.21 


Low 


.01 


Net cost to produce and sell: 

High 


38.18 




16.30 







Probably includes other expense than shipping. 



Stumpage. — The various methods by which stumpage values are 
carried on their books by different companies and charged into 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 47 

costs were described in some detail in Chapter II (pp. 14 to 16). 
Variations in methods of handling stumpage and variations in 
quality of stumpage both tend to produce wide differences in charges 
made for this item to costs. The average figures for different groups 
shown in Table 22 included charges to costs varying from $1.54 to 
$10 per thousand feet board measure in 1917 and from $0.79 to $9.45 
in 1918. In some cases the stumpage cost reported was less and in 
others greater than the actual cost of the stumpage cut. As only 
a feAv companies charged stumpage at less than cost, while a con- 
siderable number charged stumpage at more than cost, the over- 
charges more than counterbalanced the undercharges. The maximum 
charge of $10 per thousand feet in 1917 was an arbitrary figure made 
by a company that had no accurate record of original cost, and 
claimed further that in drawing near the end of its cut it foiuid 
the quantity of its standing timber had been grossly overestimated 
in the past and therefore depleted at too low a figure to wipe out 
the timber account as carried on its books. The maximum figure of 
$9.45 for 1918 was the price paid by one company for standing tim- 
ber. The low costs shown apparently were due to low-grade timber, 
inaccessibility, light stand, or to charging stumpage at the actual 
price paid for it, in some cases many years ago. In some cases com- 
panies reported a lower stumpage figure in 1918 than in 1917, due 
to cutting lower grade timber. This was particularly true of com- 
panies included in the Virginia-Carolina group, in which the timber 
holdings in many instances consist to a considerable extent of 
isolated tracts left when the larger and better areas were cut out, 
or of second growth on cut-over lands. Another factor tending to 
make stumpage values lower in the eastern part of the territory is 
the scattered character of the timber, resulting in higher logging 
costs than in denser timbered and more accessible areas. 

Although some companies reported lower stumpage costs in 1918 
than in 1917, the average stumpage cost for the 205 companies was 
almost 9 per cent higher in 1918 than in 1917. Two factors may be 
mentioned as explaining this increase. First, the market prices for 
stumpage, which are in the long run dependent upon the prices that 
can be obtained for finished lumber, tended to advance with advanc- 
ing lumber prices. Consequently companies purchasing additional 
areas, either for immediate or future operations, were obliged to pay 
higher prices for their stumpage, and the higher prices paid were 
reflected in their stumpage cost. Sales of stumpage, however, were 
not large, as the greater part of existing southern pine timber is 
already in the hands of strong companies and generally definitely 
related to existing sawmill operations. Consequently the greater 
part of the 9 per cent increase in average stumpage cost shown in 
Table 22 for the year 1918 was due to the second factor, which was 
the practice by a considerable number of mills of charging stumpage 
to costs at estimated market value or some other figure higher than 
actual cost. 

Logging. — The term " logging " as used here embraces all opera- 
tions from cutting the trees to delivery of the logs at the mill pond 
or log yard. These operations are treated as a unit, although they 
naturally divide themselves into what is commonly known as woods 



48 ' COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

cost" and "transportation cost." Woods cost includes felling the 
trees and assembling the logs by hauling or skidding in preparation 
for transportation to the mill. Transportation is generally by steam 
railway or " logging road " equipped with temporary spur tracks to 
reach areas being cut. The distances over which logs are transported 
varies widely. As the timber of some companies is much more acces- 
sible than that of others, total logging costs naturally vary greatly 
both as to woods expense and transportation. 

The average logging cost reported was the total logging expense of 
the year divided by the board measure footage of logs delivered 
at the mill during the year, this being the most reliable figure 
available for many mills that did not show all the quantities and 
inventories necessary for the more accurate computation of logging 
cost. The average logging cost computed in this way shows marked 
increase in 1918 over that of 1917. (Table 22.) The logging cost was 
highest for the Virginia- Carolina group and lowest for the Gulf 
States group in both years. The spread in costs among the 205 
companies was very large, ranging from $1.83 to $11.15 in 1917, and 
from $3.09 to $17.42 in 1918. (Table 23.) A peculiarity of this item 
is that the Gulf States group, which had the lowest average logging 
cost, also shows the highest and lowest cost for all three groups in 
both years. 

Manufacturing. — Under this heading are included all expenses of 
converting logs into finished lumber from the time they enter the 
mill pond or log yard to, but not including, the loading of the fin- 
ished lumber for shipment. In arriving at the unit costs shown in 
Tables 22 and 23 the total amount of money expended in the various 
manufacturing operations was divided by the total sawmill cut to 
obtain the cost per thousand of producing average mill-run lumber, 
and therefore the result does not apply strictly to the production of 
any one particular size or grade. The mill cost of producing timbers 
and undressed lumber is less than the average shown, while the cost 
of producing dressed lumber is slightly greater, and the cost of 
special grades and sizes, such as edge-grain flooring and interior 
finish, is considerably greater. 

The wide range in cost between companies shown in Table 23 is due 
to a number of factors, such as the kind, size, and grade of logs used, 
the character of the mill equipment, the percentage of output as 
related to mill capacity, the accounting methods used in treating 
extraordinary or unusual expenses incurred. The manufacturing 
costs varied for all companies from $2.44 to $10.11 per thousand feet 
in 1917, and from $3.76 to $13.66 in 1918. In both years the widest 
spread within the lesser territorial groups occurred in the Gulf States 
group, amounting to $7.52 in 1917 and $9.76 in 1918. 

General and administrative expense. — This item, as shown in the 
tables, includes all salaries of officers and office force, office expense, 
such as rent, light, heat, water, telephone, telegraph, stationery and 
supplies, taxes (other than income and excess-profits taxes), insurance 
against fire and tornado, etc.. on plant, equipment, inventories, and 
timber, employer's liability, depreciation on office buildings and 
equipment, and any other expenses that are not directly chargeable 
to any particular operation. 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 49 

The average general and administrative expense based on total 
general and administrative expense divided by the footage of lumber 
manufactured by all companies was $2.32 per thousand feet in 1917 
and $3.13 per thousand in 1918. These averages included high and 
low figures for different companies varying from $0.39 to $7.03 in 
1917 and from $0.71 to $9.30 in 1918. The Virginia-Carolina group 
showed the highest figures for an individual company in both years. 

The wide variations shown are explained in individual cases by 
lack of uniformity in handling depreciation, taxes, and insurance, 
and in some cases by inclusion of excessive officers' salaries in costs. 
Some companies showed abnormally high depreciation charges, while 
others showed very low charges or none at all. Some included only 
taxes on logging and manufacturing equipment, while others appar- 
ently included taxes on large timber holdings, cut-over lands, farms, 
and town property. Taxes on stumpage, if not included as a part of 
stumpage cost, should be added to general and administrative ex- 
pense, provided the timber area from which the taxes arise represents 
only a reasonable supply for existing operations. When taxes on an 
abnormally large timber supply are added to general expense, the 
result is an abnormally high figure per thousand. The same is true 
of insurance on standing timber. Abnormally high officers' salaries, 
amounting in some instances to several dollars per thousand feet, 
caused high general and administrative expenses in some cases. 
Likewise the inclusion of extraordinary expenses incurred during the 
period, but which should more properly have been spread over suc- 
ceeding years, had the same effect. 

Abnormally low general and administrative expenses were due in 
some cases to the inclusion of such expense items under other head- 
ings or to failure on the part of the management to charge general 
and administrative expenses actually incurred to costs. 

Shipping expense. — Under this heading are included labor, power, 
and materials necessary to transfer the lumber from the piles, load, 
and make it secure on or in the car. The principal item under this 
heading is the direct labor required to handle the lumber, the other 
two items being so small for some companies as to be of very minor 
importance. In the computation of shipping cost, the total number 
of feet shipped is used as the divisor in arriving at the unit cost per 
thousand feet. 

The average shipping expense for all companies amounted to 
$0.46 per thousand feet shipped in 1917 and $0.66 in 1918. These 
averages include results for individual companies ranging from $0.09 
to $4.56 in 1917 and from $0.06 to $4.51 in 1918. In both years the 
highest and the lowest costs were shown by companies of the Gulf 
States group. 

The wide range was probably occasioned by certain companies 
purchasing special equipment and charging the entire original cost 
to shipping expense in the year the equipment was bought, or in a 
very few cases, to the inclusion of outgoing freight or other items 
of expense under shipping. 

Selling expense. — Lumber is sold to the retailer in three general 
ways : Through the selling agencies of individual companies, through 
selling agencies handling the produce of a number of companies but 



50 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

owned or cooperatively controlled by the producers, and through 
middlemen or wholesalers. It is estimated that 60 per cent of the 
southern pine product is sold by the first method, which has the ad- 
vantage of giving the individual company direct supervision and 
control over the distribution of its product. Sale of the product 
through the company's own selling organization necessitates work- 
ing capital sufficient to finance both production and sale of the prod- 
uct, and in case the production is small may entail prohibitive ex- 
penses. 

The second method, that of several mills, generally more or less 
closely affiliated in ownership and control, organizing a single selling 
agency, possesses the advantage of increasing volume of sales handled 
by the sales force, with the additional advantage that an order that 
can not be filled by a single mill may be allocated to several mills. 
In other respects it possesses to a certain degree the advantages and 
disadvantages of the first method. 

The third method, selling through wholesalers, is that predomi- 
nantly used by small producers. The wholesaler handling a part or 
all of the product of a number of companies is in a position to offer 
customers a wider range of sizes and grades than a single com- 
pany. In addition to providing selling facilities, the wholesaler 
frequently renders financial assistance, especially to companies un- 
able to obtain such assistance from other sources. 

The selling expenses shown in Tables 22 and 23 are based on the 
quantity sold divided into total selling expense reported by com- 
panies distributing their lumber in all three of the ways described 
above. Naturally the expense shown varies widely with the method 
of selling used. On the average the selling expense amounted to 
$0.55 per thousand of lumber sold in 1917 and $0.68 per thousand in 
1918. The ranges for individual companies included in these aver- 
ages were from $0.01 to $1.96 in 1917, and from $0.01 to $2.21 in 1918. 

The average selling expense for many companies was materially 
lessened in both 1917 and 1918 by the fact that the Government took 
a large part of their production, and therefore the time and effort 
required to sell that part of their product was greatly reduced. The 
quantity sold decreased in 1918, hence the higher costs shown for all 
companies were principally due to maintaining large selling organi- 
zations in comparison with production and sales, or to high commis- 
sions paid to brokers, or to the erroneous inclusion of items such as 
shipping expense, demurrage charges, etc., that are not properly a 
part of selling expense. 

By-products. — The question of handling the costs and income 
from by-products in relation to the costs of the primary products is 
a difficult one in any industry. When the Commission began its 
cost investigation during the war it discovered many cases where 
no charge was made for the raw materials consumed and no part of 
the overhead expense was allocated to the production of these by- 
products. It also discovered instances where the direct manufactur- 
ing costs of by-products were so closely interwoven with the lumber 
manufacturing costs that not all of these appeared as charged 
against by-product operations, and as a consequence a very large by- 
product profit was shown. It was, in part, this situation that led 
to the practice adopted during the war period of deducting from the 
total cost of producing lumber the net income derived from the sales 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 51 

of by-products such as lath, shingles, shooks, and turpentine, when 
these were not treated as separate operations and when no credit 
was made to lumber for the raw materials entering into their manu- 
facture. Only about 40 per cent of the companies reporting showed 
income from by-products as a deduction from lumber costs. The 
remaining companies either had no by-product operations or car- 
ried the costs of such operations separate from their lumber opera- 
tions and reported by-product earnings as earnings from other 
sources. In some cases it appears that by-product costs were included 
in lumber costs and by-product sales in lumber sales. In such cases 
segregation was impossible and no deduction was shown for by- 
products. 

The average deductions from cost for by-products (see Table 22) 
are obtained by dividing the total net income from by-products re- 
ported by a part of the companies included in each group by the 
total lumber-production footage of all companies in the group. 
Since only about 40 per cent of the companies reported by-products, 
the figures shown are far from satisfactory for comparison with the 
by-product income of any individual company. The average income 
from b}'-products for the 205 companies shown in Table 22 was $0.11 
per thousand feet in 1917 and $0.12 in 1918. For individual companies 
showing income from by-products the range is from 1 cent to $3.16 
per thousand feet produced in 1917 and from 1 cent to $1.89 in 1918. 
Considering only those companies having by-product operations, the 
average income per thousand feet of lumber produced was 31 cents 
in 1917 and 32 cents in 1918. The same ranges for individual com- 
panies given above are included in these averages. 

Net cost to produce and sell. — As previously stated, the " cost to 
produce and sell," shown in Table 22, is obtained by adding together 
the unit costs of stumpage, logging, manufacturing, general and ad- 
ministrative expense, shipping, and selling, and deducting therefrom 
the net income from by-products. Various reasons for variations in 
costs for different items have been discussed in connection with the 
respective items. The cumulative effect of these various items is 
reflected in the range in net cost to produce and sell of individual 
companies included in the averages shown for all companies of $17.13 
per thousand feet in 1917 and $23.27 in 1918. These averages in- 
clude costs ranging from $12.53 to $25.27 in 1917 and from $16.30 to 
$38.18 in 1918. (See Table 23, p. 46.) 

Proportion of total production in specified cost groups. — The per- 
centages of the total production of the 205 companies falling in 
specified ranges of net cost to produce and sell are shown in Table 24, 
together with the cumulative percentage for the various ranges from 
lowest to highest net cost to produce and sell. 

In 1917, 62 per cent of the total production was manufactured by 
123 companies reporting costs to produce and sell not exceeding $18 
per thousand. Over 50 per cent of the total production was covered 
by 107 companies reporting costs ranging from $14 to $18, and nearly 
90 per cent of the total production was produced by a total of 175 
companies reporting costs not exceeding $20 per thousand. In 1918 
costs as reported advanced materially, and the spread between high- 
est and lowest was nearly $12 greater than in 1917. In 1918, 64 per 
cent of the total quantity was produced by 104 companies reporting 
unit costs not exceeding $24 per thousand. Nearly 91 per cent of the 



52 



COSTS AND PROFITS OP SOUTHERN PINE COMPANIES. 



£ al pe?th£nT d ^ m C ° mpanieS "^ !** «* exceeding 
and iSifi. 'eporrea 02/ ^05 southern pme lumber companies, 1917 





1917 


1918 


Cost per thousand feet. 


Number 
of com- 
panies. 


Per cent of total 
production. 


Number 
of com- 
panies. 


Per cent of total 
production. 




For each 
group. 


Cumu- 
lative. 


For each 
group. 


Cumu- 
lative. 


$14 and under.. 


16 

44 
63 
52 
17 
10 
3 

1 

1 

1 

1 


11.0 
23.1 

28.3 

27.4 

7.6 

2.2 

.9 



• *"l 

1 

1 


11.0 
34.1 
62.4 

89.8 
96.9 1 
99.1 
100.0 






















7 

22 

37 

38 

41 

29 

17 

5 

4 

2 

3 


5.4 

14.4 

19.1 

24.7 

16.0 

11.1 

5.3 

1.2 

2.0 

.3 

.5 


5.4 




19 8 




38 9 




63 6 


$28-$30... * "" 

$30-$32 

$32-$34 

$34-$36. . . 

Over $36 - 


79.6 

90.7 
96.0 
97.2 
99.2 
99.5 
100.0 



centalS 1 S tt f \ I" t lus jr e ',.* 6w in a s™ilar manner the per- 
centages : or the total production covered falling in SDecifipH rZt 

Proportion of production in specified ranges of stumpaoe cost — 

o^Z^ -the books 

ages of thecal production*^ %^^&^^^^ 
groups for stumpage, as reported by the companies f f r 19?7 and fim * 

TA ^^'^TM^^Z^ l l n0 ^ SVeCim mnges °f °*™We ™st 
as reported by 405 southern pme lumber companies, 1917 and 1918 



1917 



Cost per thousand feet. 



$2.50 and under 

$2.50-$3 

S3-S3.50 

$3.50-$4 

$4-$4.50 

$4.50-$5 

$5-$5.50 

$5.50-$6 

$6-$6.50 

$6.50-$7 

Over $7 



Number 
of com- 
panies. 



14 
15 
17 
24 
39 
45 
24 
14 

5 

4 

4 



Per cent of total 
production. 



For each 
group. 



4.6 

5.3 

8.3 

8.3 

18.9 

26.7 

16.7 

5.9 

2.8 

1.2 

1.3 



1918 



Cumu- 
lative. 



4.6 
9.9 
18.2 
26.5 
45.4 
72.1 
88.8 
94.7 
97.5 
98.7 
100.0 



Number 
of com- 
panies. 



Per cent of total 
production. 



For each Cumu- 
group. J lative. 



11 


2.6 


15 


5.8 


11 


4.6 


23 


8.2 


22 


10.8 


45 


23.2 


29 


21.8 


17 


10.4 


11 


4.8 


u 


4.2 


10 


3.6 



2.6 

8.4 
13.0 
21.2 
32.0 
55.2 
77.0 
87.4 
92.2 
96.4 
100.0 



XB.M.1 

BY3I7AND 1918. 




IVE 



7 



I 



7.5 1 

AND 
OVER 



29 
28 
2-? 
26 
25 
24- 
23 
22 
2 l 

■2o 

I 9 

I 8 

I 7 

l 6 

15 

I 4 

i 3 

l 2 

l I 

- iO 

9 

8 

7 

6 

5 

4 

3 

2 

I 



NUMBER OF 
COMPANIES 



COST 

RANGE'S i r j 

OQLLARS 



105332°— 22. (Face p. r>2.) 



Chart-. 2 

BY 5PeSd ™^S2P ' N PRINDPAL ELEMEN T5 DF CDST PER M.FEET.B.M , 
BYS^inEDCCI^RDUP^FDR 2D5 SOUTHERN P INE LUMBER COMPANIES .1917^0 1918. 




105332° 22. (Face p. 52.) 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



53 



In 1917, 70 companies, producing about 27 per cent, and in 1918, 
60 companies, producing 21 per cent of the total quantity, reported 
stumpage costs not in excess of $4 per thousand. In 1917, 154 com- 
panies, producing 72 per cent, and in 1918, 127 companies, pro- 
ducing 55 per cent of the total quantity, reported stumpage costs not 
exceeding $5 per thousand. In 1917, 192 companies, producing 
nearly 95 per cent of the total, and in 1918, 173 companies, producing 
87 per cent of the total quantity, reported stumpage costs not in ex- 
cess of $6 per thousand. Although there was considerable shifting 
of companies from lower to higher cost groups between the two 
years, over half of the total production (62 per cent in 1917 and 
nearly 56 per cent in 1918), was covered by companies reporting 
stumpage costs ranging from $4 to $5.50 per thousand feet in each 
year. The results for 143 companies as revised by the commission 
are shown in Table 32, page 60. 

Proportion of production in specified ranges of logging costs. — 
Logging includes all expenses of cutting and transporting logs from 
the woods to the mill pond and log yard. Table 26 shows the per- 
centages of total production covered falling in specified ranges of 
cost of logging as reported by the 205 companies for 1917 and 1918 : 

Table 26. — Proportion of production falling in specified ranges of Jogging costs 
as reported by 205 southern pine lumber companies, 1917 and 1918. 





1917 


1918 


Cost per thousand feet. 


Number 
of com- 
panies. 


Per cent of total 
production. 


Number 
of com- 
panies. 


Per cent of total 
production 




For each 
group. 


Cumu- 
lative. 


For each 
group. 


Cumu- 
lative. 


$2.50 and under 


15 

6 

10 

16 

25 

26 

26 

26 

17 

12 

9 

7 

2 

1 


11.1 

6.1 

8.8 

7.4 

11.0 

14.1 

12.0 

10.3 

6.1 

3.8 

3.1 

2.6 

.2 

1.3 


11.1 
17.2 
26.0 
33.4 
44.4 
58.5 
70.5 
80.8 
86.9 
90.7 
93.8 
96.4 
96.6 
97.9 








$2.50-$3 








$3-$3.50 


8 

5 

9 

13 

7 

8 

10 

20 

22 

15 

21 

15 

8 

9 

19 

13 

3 


6.8 
3.0 
8.7 
8.4 
3.1 
7.6 
5.0 

10.6 
9.0 
4.8 
6.6 

10.1 
2.9 
2.8 
6.0 
3.9 
.7 


6.8 


$3 .50-$4 


9.8 


$4-$4.50 


18.5 


$4.50-$5 


26.9 


$5-$5.50 


30.0 


$5.50-$6 


37.6 


$6-56.50 


42.6 


$6.50-$7 


53.2 


$7-$7.50 


62.2 


$7.50-$8 


67.0 


$8-$8.50 


73.6 


$8.50-$9 


83.7 


$9-$9.50 


86.6 


$9.50-$10 


2 
5 


.7 
1.4 


98.6 
100.0 


89.4 


$10-512 


95.4 


$12-$15 


99.3 


Over $15 








100.0 













Logging costs showed a wide spread in each year and was materially 
higher in 1918 than in 1917. Consequently there was a great deal of 
shifting of companies from lower to higher cost groups throughout 
the ranges of cost shown. In 1918, also, the range from lowest to 
highest cost was somewhat greater than in the preceding year. In 
1917 about 59 per cent of the total production footage covered was 
produced by 98 companies reporting logging costs not exceeding 
$5 per thousand, while in 1918 only 27 per cent, representing the pro- 
duction of but 35 companies, fell within this range. In 1918 the 



54 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



production of 80 companies reporting logging costs ranging up to 
$7 per thousand was required to cover 53 per cent of the total pro- 
duction, and that of 102 companies reporting logging costs not in 
excess of $7.50 was required to cover 62 per cent of the total. 

In 1917, 179 companies reporting logging costs not exceeding $7 
per thousand produced nearly 91 per cent of the total footage. In 
1918 this maximum logging cost ($7) covered, as stated above, but 
53 per cent of the total. To cover 89 per cent of the total footage for 
1918 required a maximum logging cost of $10 per thousand. In 

1917 the largest percentages of the total footage falling in specified 
50-cent ranges were in the ranges between $4 and $6 per thousand. 
These ranges in 1917 covered nearly half of the total production. In 

1918 there was a much more general distribution of the total produc- 
tion to the various ranges, the two largest percentages falling in 
single groups being almost 11 per cent in the group from $6.50 to $7, 
and slightly more than 10 per cent in the group from $8.50 to $9. 

Proportion of production in specified ranges of manufacturing 
costs. — Table 27 shows the percentages of total production falling in 
specified ranges of manufacturing cost, as reported by the 205 
companies : 

Table 27. — Proportion of production falling in specified ranges of manufacturing 
costs reported by 205 southern pine lumber companies, 1917 and 1918. 





1917 


1918 


Cost per thousand feet. 


Number 
of com- 
panies. 


Per cent of total 
production. 


Number 
of com- 
panies. 


Per cent of total 
production. 




For each 
group. 


Cumu- 
lative. 


For each 
group. 


Cumu- 
lative. 


$3.50 and under 


15 

47 

37 

29 

25 

17 

13 

10 

3 

3 

1 

1 


9.1 

25.8 

18.0 

11.7 

16.2 

6.1 

5.8 

4.1 

.6 

.4 

.3 

.4 


9.1 
34.9 
52.9 
64.6 
80.8 
86.9 
92.7 
96.8 
97.4 
97.8 
98.1 
98.5 








$3.50-$4 


2 

2 

7 

19 

31 

27 

16 

16 

20 

20 

10 

8 

8 

19 


0.6 

.6 

5.7 

7.8 

18.4 

15.3 

8.2 

7.6 

10.7 

8.3 

3.0 

5.8 

3.1 

4.9 


0.6 


$4-$4.50 . . 


1.2 


$4.50-$5 


6.9 


$5-$5.50 


14.7 


$5.50-$6 


33.1 


$6-$6.5Q 


48.4 


$6.50-$7 


56.6 


$7-$7.50 


64.2 


$7.50-$8 


74.9 


$8-$8.50 


83.2 


$8 .50-19 


86.2 


$9-$9.50 


92.0 


S9.50-S10 


3 
1 


1.3 

.2 


99.8 
100.0 


95.1 


Over $10 


100. © 







For manufacturing costs, as for logging, there was a considerable 
increase in cost between the two years, which resulted in the shifting 
of companies from lower to higher groups. In 1917, 26 per cent of 
the total quantity was produced by companies reporting costs rang- 
ing from $3.50 to $4 per thousand, while in 1918 only slightly more 
than one-half of 1 per cent was in this range. In 1917, 53 per cent 
of the total footage was produced at a manufacturing cost not ex- 
ceeding $4.50, and nearly 65 per cent of the total production fell 
under $5 per thousand. In 1918, to cover about 57 per cent of the 
footage, required the production of companies reporting manufactur- 
ing costs up to $7, while 64 per cent of the total required a maximum 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



55 



range up to $7.50 per thousand. In 1917 nearly 93 per cent of the 
total footage was produced at a cost not exceeding $6.50 and nearly 
97 per cent at not exceeding $7 per thousand, whereas in 1918 to 
cover 92 per cent required the production of companies reporting up 
to $9.50, and to cover 95 per cent of the total required costs ranging 
up to $10 per thousand. 

Proportion of production in specified ranges of general adminis- 
trative, shipping, and selling costs. — In the preparation of the data 
shown in Table 28 general administrative, shipping, and selling ex- 
penses have been combined, and the companies ranked on the basis 
of the total for all three items. The table shows the percentages of 
total production falling in specified ranges of cost for the three items 
combined. 

Table 28. — Proportion of production falling in specified ranges of general and 
administrative, shipping, and selling costs combined, as reported by 205 south- 
ern pine lumber companies, 1911 and 1918. 





1917 


1918 


Cost per thousand feet. 


Number 
of com- 
panies. 


Per cent of total 
production. 


Number 
of com- 
panies. 


Per cent of total 
production. 




For each 
group. 


Cumu- 
lative. 


For each 
group. 


Cumu- 
lative. 


$1.50 and under 


12 

18 

33 

31 

31 

34 

20 

8 

5 

6 

3 


3.9 

6.4 

12.9 

18.5 

17.2 

17.1 

12.3 

2.3 

1.9 

.« 


3.9 
10.3 
23.2 
41.7 
58.9 
76.0 
88.3 
90.6 
92.5 
98.4 
99.1 


3 
3 

12 
16 

28 
30 
19 
21 
20 
IS 
13 
8 
4 
10 


0.5 

.8 

4.0 

9.7 

14.8 

10.6 

13.4 

8.3 

12.5 

10.5 

5.7 

5.2 

1.0 

3.0 


0.5 


$1.50-$2 


* 1.3 


$2-$2.50 


5.3 


$2.50-$3 


15.0 


$3-$3.50 


29.8 


$3.50-$4 


40.4 


$4-$4.50 


53.8 


$4.50-$5 


62.1 


$5-$5 .50 


74.6 


$5.50-$6 


86.1 


$6-86.50 


90.8 


$6.50-$7 


96.0 


$7-$7.50 


1 
3 


.1 

.8 


99.2 
100.0 


97.0 


Over $7.50 


100.0 







Expenses incidental to general administration, shipping, and sell- 
ing increased in 1918 over those for 1917. In 1917 practically 59 per 
cent of the total footage was covered by companies showing unit costs 
for these three items combined, ranging up to $3.50, and 91 per cent 
at unit costs up to $5 per thousand. In 1918, however, costs ranging 
up to $4.50 per thousand were required to cover slightly less than 54 
per cent of the total, and costs up to $6.50 per thousand to cover ap- 
proximately 91 per cent of the footage. These increases are similar 
to those for logging and manufacturing shown in Tables 26 and 27. 

Graphical presentation of proportion of production in specified 
ranges of cost. — Chart 2, facing page 52, as already stated, presents 
graphically the data shown in Tables 24 to 28, inclusive. The chart 
brings out even more strikingly than the tables or the preceding dis- 
cussion the shifting of production from lower cost groups in 1917 to 
higher cost groups in 1918. Of the various items comprising net 
cost to produce and sell, it is quite noticeable that, although there was 
a marked tendency for stumpage costs reported to increase in 1918, 
as compared with 1917, the shifts in distribution of total production 



56 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

to the various ranges of cost were less irregular than for the other 
items of cost. The shifting of production from lower to higher cost 
ranges of logging was not only very pronounced but was also very ir- 
regular. The shifting of production from lower to higher ranges of 
cost for manufacturing and for general administrative, shipping, and 
selling combined was also noticeable, but was less irregular than for 
logging. 

Maximum costs to produce various percentages of the output. — 
During the war it was frequently the practice to show the maximum 
cost of producing various proportions of the total output of southern 
pine lumber, as of many other commodities, in order that the 
price-fixing committee of the War Industries Board might have at 
its disposal data which would enable it to determine a price which 
would insure the production of the requisite supply. Chart 3, oppo- 
site, shows the cost by operations and the total net cost to produce 
and sell various percentages of the total output of southern pine cov- 
ered in this discussion. The chart also shows the net cost to produce 
and sell for each of the 205 companies for the year 1918. In prepar- 
ing the chart the companies were ranked in order from lowest to 
highest net cost. The maximum net cost to produce and sell is indi- 
cated at intervals of 10 per cent of the total production from the 
lowest to the highest cost. The figures for individual companies on 
which this chart is based will be found in Exhibit 6, page 78. 

The chart shows in a graphical manner the increase in costs from 
'lowest to highest for the year. It will be noted that the percentage 
groups showing the greatest spread in costs were the to 10 per cent 
group and the 90 to 100 per cent group. 

It is also to be noted that certain of the 10 per cent groups were 
made up of fewer companies than others. This is especially true of 
the first 10 per cent group and the 50 to 60 per cent group. It is 
likewise noticeable that the 90. to 100 per cent group consists of a 
comparatively large number of small companies having widely vary- 
ing costs. The increase in costs is fairly constant through 90 per 
cent of the production, but mounts rapidly for the companies consti- 
tuting the last 10 per cent. 

For different cost items there is wide variation shown for different 
companies. The maximum and minimum costs shown for stumpage, 
logging, and manufacturing are the same as those shown in Table 23. 
General expense, as shown in the chart, includes three items, namely, 
general expense, shipping, and selling, that are shown separately in 
Table 23. 

It is interesting to note that the average net cost to produce and 
sell for the 205 companies shown in Table 22, amounting to $23.27, 
represents approximately the net cost to produce and sell of a com- 
pany located in the group just below the 50 per cent point. 

Section 3. Unit costs, sales realization, and profits, 143 companies. 

For the 143 companies which have been considered in Chapter III 
in the discussion of the rate of return on investment, it is practicable 
to present unit costs and profits after revision to exclude exces- 
sive depletion on account of appreciation of stumpage values. 
Of the 143 companies 57 returned reports indicating either appre- 
ciation or depreciation of stumpage values in investment or in costs, 



L RUN IN 1918, 

v to hicjh with the maximum 
>.se feet BM.' 




105332°— 22 (Face p. 56.) 



CDST TD PRODUCE: ak 

Showing Sfump a3 e Lo 3g ,n 3 Manuf ^* AND sELL SOUTHERN PINE LUMBER, PEH M FEET MILL RUN IN I3I8 : 

costs of various pe r cer n3 ' QeneralEXpenSe( '^^^ 

f n^es of th e output, as reported by eo 5 Companies having a total production of 5,5«a,9oa.e?e feet B M. 




105.T!:.'-' -■_••_' (Pace p. 58.) 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



57 



or in both, in one or both years. In most cases in which adjustments 
were made the charge for stumpage was higher than the prices actu- 
ally paid for it and in some cases higher than the figures at which 
standing timber was carried on the books. The reports of the re- 
maining 86 companies showed no appreciation in costs, stumpage be- 
ing charged at cost as shown by the books, although it is probable 
that if complete analyses of the timber accounts- of some of these 
companies were available it would be found that the timber is carried 
on the books at considerably appreciated values. 

The following table shows a summary of the revisions made in 
stumpage for the 143 companies. These companies are divided into 
two groups consisting of 86 companies for which no revisions were 
made and 57 companies for which revisions were made. The 57 com- 
panies are again subdivided into two groups to show the revisions 
made for 42 companies having appreciation in both investment and 
cost in both years and 15 companies for which miscellaneous revi- 
sions in stumpage costs were made. Among the 15 companies are 
included those showing appreciation in both investment and costs in 
only one year and others showing appreciation only in investment 
or only in costs in one or both years. The groupings are identical 
with those appearing in Table 30 (p. 58), but the adjustments shown 
differ slightly, because in the computation of unit cost of sales the 
total cost of sales has been divided by the footage sold ; while in the 
computation of appreciation in stumpage cost, as shown in Table 29, 
the total appreciation for stumpage cut during the year has been 
divided by the stumpage footage. 

Table 29. — Revision for appreciation per thousand feet in stumpage charged to 
costs, 1J/3 southern pine lumber companies, 1917 and 1918. 



Companies — 



Number 
of com- 
panies. 



Stumpage. 



Reported 
by com- 
panies. 



Appre- 
ciation 
adjust- 
ment. 



Revised 
cost. 



Per cent 
of de- 
crease. 



1917. 

Showing no appreciation 

Showing appreciation 

(a) Appreciation both years 
(6) Miscellaneous 

All companies 

1918. 

Showing no appreciation 

Showing appreciation 

(o) Appreciation both years 
(6) Miscellaneous 

All companies 



86 

57 
42 
15 



$4.50 
4.49 
4.71 
3.58 



$1.85 

2.17 

.53 



$4.50 
2.64 
2.54 
3.06 



41.2 
46.1 
14.5 



143 



4.50 



.85 



3.65 



18.9 



4.98 
4.83 
5.02 
4.03 



2.13 

2.45 

.81 



4.98 
2.70 
2.57 
3.22 



44.1 

48.8 
20.1 



143 



4.91 



.97 



3.94 



19.7 



Considering first the percentage increases in stumpage cost in 
1918 over 1917, both before and after revision, it will be noted that 
before revision the 15 miscellaneous companies showed the largest 
percentage increase in stumpage cost, but after revisions were made 
the percentage increase for the 15 companies was much lessened. 
The 86 companies reporting no appreciation, and for which, there- 
fore, no revision was made, showed much the largest increase in 
stumpage costs. 



58 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



For the 57 companies for which revisions were made, the average 
value of stumpage was decreased $1.85 per thousand feet board meas- 
ure, or 41 per cent in 1917, and $2.13, or 44 per cent, in 1918. For 
the 42 companies for which revisions were made in both costs and 
investment in both years, the reduction in stumpage cost amounted 
to $2.17, or 46 per cent, in 1917, and $2.45, or nearly 49 per cent, in 
1918. For the 15' companies for which miscellaneous revisions were 
made the cost of stumpage as reported and amounts of the revisions 
made were materially less than for the 42 companies. When aver- 
aged over the total production of the 143 companies, for 86 of which 
no revisions were made, the reduction made in stumpage cost per 
thousand feet board measure, as reported, amounted to $0.85, or 
almost 19 per cent, in 1917, and $0.97, or nearly 20 per cent, in 1918. 

Average cost of sales, sales realization, and profit before and 
after revision for appreciation. — Table 30 shows the cost of sales, 
sales realization, and net earnings from lumber before and after 
revision of costs for appreciation in stumpage. The 143 companies 
are divided into two main groups, viz, 86 companies whose reports 
did not disclose any appreciation and 57 companies whose reports 
showed appreciation. The amounts of revision obtained by sub- 
traction differ slightly from those shown in Table 29, because in the 
computation of cost of sales full consideration has been given to all 
available inventories while the results shown in Table 29 include no 
inventory adjustments whatever. 

Table 30. — Average cost of sales, sales realization, and profits per thousand feet 
before and after revision for appreciation in stumpage charged to costs, 143 
southern pine lumber companies, 1917 and 1918. 





Number 
of com- 
panies. 


Cost of sales. 


Sales 
realiza- 
tion. 


Net profit 


on lumber. 


Companies— 


Reported. 


Revised. 


Reported. 


Revised. 


1917. 
Showing no appreciation 


86 
57 


$17.09 
16.09 


$17. 09 
14.27 


$20. 79 
21.11 


$3.70 
5.02 


$3.70 


Showing appreciation 


6.84 






All companies 


143 


16.63 


15.81 


20.93 


4.30 


5.12 






1918. 
Showing no appreciation 


86 
57 


22.91 
21.48 


22.91 
19.52 


27.00 
26.82 


4.09 
5.34 


4.09 


Showing appreciation 


7.30 






All companies 


143 


22.25 


21.34 


26.92 


4.67 


5.58 



The greatest significance attaches to the figures for the 57 com- 
panies whose reports showed a definite amount of appreciation in 
the figures at which stumpage was charged into costs. The average 
amount of appreciation deducted from cost of sales for the 57 com- 
panies amounted to $1.82 per thousand feet board measure in 1917 
and $1.96 in 1918. Reducing cost of sales by these amounts resulted 
in correspondingly increased profits for the 57 companies. 

The reports of the remaining 86 companies showed no apprecia- 
tion and are tabulated as including no appreciation in costs, al- 
though it is, as previously explained, not at all improbable that 



UNIT COSTS, SALES REALIZATION", AND PROFITS. 



5.9 



some at least of the 86 would show appreciation if complete analyses 
of their timber accounts were available. 

Costs and earnings by size of companies. — In the discussion of 
the 205 companies a comparison was made of the costs and earnings 
for different size groups based on quantity of board feet sold. In 
the following table similar data are presented for the 143 companies 
whose costs and investments were revised with regard to apprecia- 
tion of stumpage. The data are shown as revised by the Commis- 
sion, but the reported costs are also shown in the Appendix. (See 
Table 46, p. 92.) 

Table 31. — Costs and earnings per thousand feet, as revised by the Commission; 
for 148 southern pine lumber companies, by territorial groups and quantity 
sold, 1917 and 1918. 



Number of board feet. 


1917 


1918 


Number 
of com- 
panies. 


Per cent 
of sales 
footage. 


Cost 

of 

sales. 


Earn- 
ings on 
lumber. 


Number 
of com- 
panies. 


Per cent 
of sales 
footage. 


Cost 

of 
sales. 


Earn- 
ings on 
lumber. 


Gulf States group* 

12,500,000 and under 

12,500,000 to 25,000,000. . . . 
25,000,000 to 50,000,000. . . . 
50,000,000 to 100,000,000. . . 
Over 100,000,000 


10 
36 
45 
17 

8 


1.9 
12.6 
29.8 
21.0 
22.7 


$16. 63 
16.97 
15.29 
14.89 
15.42 


$3.89 
3.48 
6.09 
6.34 
5.45 


17 
42 
34 
17 
6 


3.2 
16.1 
26.2 
24.6 
18.7 


$23.38 
22.27 
20.32 
20.07 
20.92 


$1.28 
4.11 
6.60 
6.83 
6.16 


Total 




116 


88.0 


15.50 | 5.56 116 


88.8 


20.84 


5.93 


Georgia- Florida group: 

12,500,000 and under 

12,500,000 to 25,000,000. . . . 
25,000,000 to .50,000,000. . . . 
50,000,000 to 100,000,000. . . 




4 
6 
3 


.6 
1.9 
2.3 


17.56 
16. 65 
15.93 


1.95 
2.30 
5.47 


5 
4 
3 
1 


.9 
1.3 
2.0 
1.1 


22.21 
22.13 
24.07 
17.77 


3.00 

2.80 

1.90 

10.10 


Over 100,000.000 





























Total 


13 | 4.8 


16.43 


3.76 ! 13 


5.3 


22.01 


3.94 






Virginia-Carolina group: 

12,500,000 and under 

12,500,000 to 25,000,000 

25,000,000 to 50,000,000. . . . 
60,000,000 to 100,000,000. . . 
Over 100,000,000 


4 
5 
2 
3 


.5 
1.6 
1.1 
4.0 


17.63 
19.40 
14.06 
20.67 


1.74 

1.48 

3.50 

15.15 


6 
5 
1 

2 


.8 
1.6 

.9 
2.6 


27.64 
29.82 
30.59 
26.04 


1.71 

.78 

3.70 

1.57 




















Total 


14 


7.2 


19.21 


.68 


14 


5.9 


27.99 


1.71 






All groups: 

12,500,000 and under 

12,500,000 to 25,000,000. . . . 
25,000,000 to 50,000,000. . . . 
50,000,000 to 100,000,000. . . 
Over 100,000,000 


18 
47 
50 
20 

8 


3.0 

16.1 
33.2 
25.0 
22.7 


16.99 
17.17 
15.30 
15.82 
15.42 


3.14 
3.14 
5.96 
5.24 
5.45 


28 
51 
38 
20 
6 


5.0 
19.0 
29.1 
28.2 
18.7 


23.89 
22.89 
20.90 
20.53 
20.92 


1.67 
3.74 
6.18 
6.47 
6.16 






Total 


143 


100.0 


15.81 


5.13 


143 


100.0 


21.33 


5.57 







1 Loss. 



The reported costs for the 143 companies, which, as stated above, 
are shown in the appendix, were not generally dissimilar, either in 
amount or in the relations of the different groups, to the reported 
costs of the 205 companies, and therefore do not require any special 
comment. The same may be said with regard to earnings. Generally 
speaking, the revision decreased costs and increased earnings per 
thousand in a more or less similar degree, the outstanding exception 
being the Virginia-Carolina group, which reported no appreciation. 
Consequently the general conclusion drawn from a comparison of the 
revised figures for these 143 companies is substantially the same as 
that drawn from the comparison already made for the unrevised costs 



60 



costs and profits or southern pine companies. 



of the 205 companies. (See Table 21, p. 43.) The companies with 
medium size or large sales had lower costs and higher profits per 
unit of product than the companies which sold comparatively small 
quantities of lumber. The minimum cost and maximum profit, how- 
ever, did not fall in am^ case to the largest size group. Thus for costs 
the next to the largest size group had the lowest average for the Gulf 
group in both 1917 and 1918, while the middle group was second and 
the largest size group third. The same ranking occurred with respect 
to earnings per thousand. For the other two groups the smaller 
number of companies and the absence of very large companies give 
somewhat varying but not contradictory results, while for all groups 
combined the situation was substantially the same as for the Gulf 
group. 

Table 32. — Proportion of production falling in specified ranges of stumpage 
cost, as reported by 143 southern-pine lumber companies and as revised by 
the Commission, 1917 and 1918. 





Reported. 


Revised. 


Cost per thousand feet. 


Number 
of com- 
panies. 


Per cent of total 
production. 


Number 
of com- 
panies. 


Per cent of total 
production. 




For each 
group. 


Cumu- 
lative. 


For each 
group. 


Cumu- 
lative. 


1917. 
$2.50 and under 


8 

9 

12 

18 

27 

35 

19 

7 

3 

2 

3 


4.4 

3.9 

8.5 

8.5 

18.8 

28.2 

19.2 

5.0 

1.5 

.7 

1.3 


4.4 
8.3 
16.8 
25.3 
44.1 
72.3 
91.5 
96.5 
98.0 
98.7 
100.0 


35 

15 

13 

17 

21 

22 

9 

4 

2 

2 

3 


27.3 

8.8 

9.1 

10.4 

14.5 

13.5 

10.9 

2.4 

1.1 

.7 

1.3 


27.3 


$2.50 to $3.00 


36.1 


$3.00 to $3.50 


45.2 


$3.50 to $4.00 


55.6 


$4.00 to $4.50 


70.1 


$4.50 to $5.00 


83.6 


$5.00 to $5.50 


94.5 


$5.50 to $6.00 


96.9 


$6.00 to $6.50 


98.0 


$6.50 to $7.00 


98.7 


Over $7.00 


100.0 






Total 


143 


100.0 




143 


100.0 










1918. 
$2.50 and under 


5 
12 

7 

17 

13 

33 

25 

12 

5 

7 

7 


2.1 

5.7 

4.2 

8.3 

9.7 

24.6 

24.5 

10.9 

2.7 

4.0 

3.3 


2.1 
7.8 
12.0 
20.3 
30.0 
54.6 
79.1 
90.0 
92.7 
96.7 
100.0 


33 

18 

7 

18 

13 

20 

12 

8 

4 

2 

S 


24.5 

12.0 

5.2 

11.1 

9.2 

10.6 

13.0 

7.2 

2.2 

1.2 

3.8 


24.5 


$2.50 to $3.00 


36.5 


$3.00 to $3.50 


41.7 


$3.50 to $4.00 


52.8 


$4.00 to $4.50 


62.0 


$4.50 to $5.00 


72.6 


$5.00 to $5.50 


85.6 


$5.50 to $6.00 


92.8 


$6.00 to $6.50 


95.0 


$6.50 to $7.00 


96.2 


Over $7.00 


100.0 






Total 


143 


100.0 




143 


100.0 











For comparison with Table 25 (see p. 52), which gives for 205 
companies the proportion of production falling in specified ranges 
of reported stumpage cost, a similar table is given below for the 143 
companies on the basis of revised costs. For other items of cost this 
form of classification is not repeated as the revision in question did 
not affect them. The revision by generally reducing the cost of 
stumpage tended, of course, to put a larger proportion of the pro- 
duction in the lower part of the scale of stumpage cost. Thus in 1918 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



61 



the reported stumpage costs for 50 per cent of the output ran as high 
as the $4.50 to $5 stumpage cost group, while for the revised costs 50 
per cent of the production fell in the group of $3.50 to $4 stumpage 
cost or lower. Or to put it another way, in 1918, taking stumpage 
costs up to and including $5 there would be included on the basis of 
-eported costs only 54.6 per cent of the production, while on the basis 
of revised costs there would be 72.6 per cent. 

Cost of sales, sales realization, and earnings per thousand 
-In order to show the unit costs of the 143 companies whose 



feet. 



investment and earnings on investment are discussed in Chapter III 
the following tabulations are presented. The groupings used are the 
same as those used in discussing investments and earnings in Chapter 
III. The first grouping shows the costs, sales realization, and profits 
as reported for the 143 companies as a single group and subdivided 
according to territorial location into the following three subgroups : 
Gulf States group, 116 companies in the States of Arkansas, Ala- 
bama, Louisiana, Mississippi, Oklahoma, and Texas ; Georgia-Florida 
group, 13 companies in the two States named; and the Virginia- 
Carolina group, 14 companies in the States of Virginia, North Caro- 
lina, and South Carolina. In Table 30 the 143 companies are 
grouped to show the results for 86 companies whose reports did not 
disclose appreciation in stumpage values and 57 companies whose 
reports showed appreciation in timber investment and stumpage 
charged to costs in one or both years. 

Average unit cost of sales, sales realization, and profit. — The aver- 
age unit cost of sales, sales realization, and profit per thousand feet 
board measure, shown in Table 33. are computed in the same manner 
as those shown for the 205 companies previously discussed. (See pp. 
40 to 44.) The results shown are those reported by the companies, 
full consideration being given to all available inventories in deter- 
mining the cost of sales and profits. In this tabulation the results 
are shown both before and after adjustments for appreciated values 
in stumpage. 

Table 33. — Average cost of sales, sales realization, and profit per thousand feet, a 
reported by 143 southern pine lumber companies and as revised by the Commission, by 
territorial groups, 1917 and 1918. 



Group. 


Num- 
ber 
of 
com- 
panies. 


Cost of sales. 


Sales 
reali- 
zation. 


Net earnings 
on lumber. 


Net 
earn- 
ings 
from 
other 
sources. 


Total net 
earnings. 


Re- 
ported. 


Re- 
vised. 


Re- 
ported. 


Re- 
vised. 


Re- 
ported. 


Re- 
vised 


1917. 
Gulf States 


116 
13 
14 


$16. 41 
16.92 
19.21 


$15. 50 
16.43 
19.21 


$21. 06 
20.19 
19.89 


$4.65 

3.27 

.68 


$5.56 

3.76 

.68 


$0.97 
.85 
.53 


$5.62 
4.12 
1.21 


$6.53 


Georgia- Florida 


4.61 


Virginia-Carolina 


1.21 


All groups 




143 


16.63 


15.81 


20.93 


4.30 


5.12 


.93 


5.23 


6.05 


1918. 
Gulf States 




116 
13 
14 


21.86 
22.44 
27.99 


20.86 
22.01 
27.99 


26.79 
25.95 
29.70 


4.93 
3.51 
1.71 


5.93 
3.94 
1.71 


1.10 

.69 
.29 


6.03 
4.20 
2.00 


7.03 


Georgia-Florida 


4.63 


Virginia-Carolina 


2.00 


AH groups 




143 


22.25 


21.34 


26.92 


4.67 


5.58 


1.03 


5.70 


6.61 






105332°— 22 


6 



















62 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

Although considerable differences occur in the amounts of items 
shown in Table 33 for the 143 companies, as compared with those 
shown in Table 19 for the larger group of 205 companies, practically 
the same general trend in costs, sales realization, and profits are 
shown for both groups. 

For the 143 companies unit costs and sales realization, showed 
marked increases in 1918 over the preceding year. In terms of 
percentages, the average cost of sales, excepting for the Virginia- 
Carolina group, increased somewhat more rapidly than the selling 
prices. In both years the Gulf States group realized the largest 
and the Virginia- Carolina group the smallest net earnings per thou- 
sand feet on lumber. For all three groups the amount of revised 
earnings on lumber was 46 cents greater in 1918 than in 1917. This 
increase of about 9 per cent included increases in profits from lum- 
ber amounting to 37 cents per thousand for the Gulf States group, 
18 cents per thousand for the Georgia-Florida group, and $1.03 per 
thousand for the Virginia-Carolina group. In 1917 the profits of 
the last-named group were small compared with those of either of 
the other groups. Even in 1918, when their profits per thousand 
were two and one-half times as great as in 1917, their earnings were 
still small compared with those of the other two groups. 

Net profits from other sources include income from outside invest- 
ments, earnings of owned common carriers, etc., and for those com- 
panies keeping accounts for their by-product operations separate 
from those for their lumber operations, earnings from by-products. 
Profits from other sources increased in 1918 for the Gulf States 
group, but decreased for both of the other groups. 

Total earnings increased in 1918 ; the average increase in revised 
earnings for all groups was 56 cents per thousand, representing a 9 
per cent increase over the amount per thousand earned in 1917. Here 
again the Virginia- Carolina group showed the largest increase in 
earnings per thousand, but even after the increase their profit per 
thousand was less than half that of either of the other groups. 

Unit production and selling costs by operations. — Table 34 shows 
the unit costs by operations of producing and selling for 143 manu- 
facturers of southern pine lumber. The companies are grouped, 
as in the preceding table, into three territorial groups. In com- 
puting the figures shown in the table it has been found necessary 
on account of lack of complete information for a considerable num- 
ber of companies to use the costs reported for production in the 
various departments as described in Exhibit 5 (p. 76) . Consequently, 
the net cost to produce and sell obtained by adding together the unit 
costs for the different departments differs from the true net cost 
of sales because of lack of inventory adjustments. The costs are 
shown as reported and as revised, but the only item of cost affected 
by the revision is stumpage. 



UNIT COSTS, SALES REALIZATION, AND PROFITS. 



63 



Table 34. — Average cost per thousand feet of producing and selling southern 
pine {mill-run) lumber, as reported by 1^3 companies and as revised by the 
Commission, by territorial groups, 1917 and 1918. 





Num- 
ber of 
com- 
panies. 


Stumpage. 


Log- 
ging- 


Manu- 
factur- 
ing. 


Gen- 
eral 
and 
admin- 
istra- 
tive. • 


Ship- 
ping. 


Selling 


By- 
prod- 
uct 
deduc- 
tions. 


Net cost to pro- 
duce and dell. 


Group. 


Re- 
ported 


Re- 
vised. 


Re- 
ported 


Re- 
vised. 


1917. 
Gulf States 


116 
13 
14 


$4.66 
3.45 
3.24 


$3.72 
2.98 
3.24 


$4.35 
5.62 
6.58 


$4. 45 
5.31 
6.52 


S2.31 
1.71 
2.77 


$0.49 
.30 
.22 


$0.59 
.57 
.61 


$0.09 
.34 
.15 


$16. 76 
16.62 
19.79 


$15. 82 


Georgia-Florida 


16.15 
19.79 




143 


4.50 


3.65 


4.58 


4.64 


2.32 


.47 


.59 


.11 


16.99 


16.14 


1918. 
Gulf States 


116 
13 
14 


5.08 
3.79 
3.53 


4.00 
3.36 
3.53 


6.43 

8.01 

10.16 


6.75 

7.42 
9.80 


3.12 
2.45 
4.34 


.71 
.51 
.34 


.74 
.62 

.74 


.08 
.44 

.27 


22.75 
22.36 
28.64 


21.67 


Georgia-Florida 

Virginia-Carolina 


21.93 
28.64 




143 


4.91 


3.94 


6.74 


6.97 


3.16 


.67 


.73 


.11 


23.07 


22.10 



Comparison of the figures as reported by the 143 companies with 
those reported by the 205 companies in Table 22 (p. 45) shows some 
variation in every item. These differences, except in a few cases, 
are not large. 

In general, every item of cost showed marked increase in 1918 over 
1917. Stumpage, as reported by the companies, increased on the 
average for all companies about 9 per cent, logging 47 per cent, man- 
ufacturing 50 per cent, general and administrative 36 per cent, ship- 
ping almost 43 per cent, selling nearly 24 per cent. These costs in- 
clude by-product costs. After deducting income from by-products 
the average reported net cost to produce and sell for all companies 
was approximately 36 per cent greater in 1918 than in 1917. The 
revised stumpage increased about 8 per cent, and the revised net cost 
to produce and sell about 37 per cent. 

There is considerable spread between the different groupings of 
companies for each item shown. The Virginia-Carolina group gen- 
erally showed higher costs than either of the other two groups and 
showed a net cost to produce and sell several dollars higher in both 
years than either of the other groups. For the item of stumpage 
the Gulf States group showed the highest figure in both years, while 
for most other items this group showed lower costs than the other 
two groups. 



Chapter V. 

RECENT PRICE MOVEMENTS. 

Section 1. Government price regulation. 

Conditions leading up to regulation. — The outbreak of the 
World War had a very depressing effect on the lumber industry. 
This was due in the first place to the cutting off of exports to Euro- 
pean countries, thereby increasing the quantity to be absorbed in the 
domestic markets, and in the second instance, to the general derange- 
ment of economic conditions everywhere, which brought about a 
feeling of uncertainty and a consequent curtailment of domestic 
building and other operations requiring the use of lumber. In 
1915 the situation began to improve as the country adjusted itself 
to the new economic conditions occasioned by the war. In 1916 there 
was considerable building activity and also liberal purchases by the 
railroads which brought about a very marked improvement over 
1914 and 1915. In 1917, when this country became a participant in 
the World War, there was a good demand for lumber from normal 
sources, which, coupled with the military requirements of the Gov- 
ernment for cantonment stock and ship timbers, resulted in a sharp 
advance in prices. 

Before the large purchases necessary for the Government's imme- 
diate and anticipated war needs could be made, it was necessary to 
determine what was wanted, and when and where the stock should 
be delivered, as well as to devise ways and means by which the lumber 
industry could supply the lumber. 

One of the first steps taken to- solve the problem was the organiza- 
tion in May, 1917, of a committee on lumber and other forest prod- 
ucts under the raw materials division of the Council of National 
Defense. The function of this committee was to ascertain the needs 
of the Government for lumber and forest products and to devise 
plans by which such requirements could be furnished promptly and 
at fair prices. This committee continued to function under the 
Council of National Defense until September, 1917, when its work 
was transferred to the lumber section of the newly created War 
Industries Board. From that time on until the termination of the 
war it continued to function as a part of that body. 

At first the duties of the committee were mainly advisory in char- 
acter, but later its powers were broadened and extended until at the 
conclusion of the war it was the principal agency between the vari- 
ous Government departments and the industry. It kept in touch 
with the general situation in the lumber industry, enforced the rul- 
ings of the price-fixing committee, and allocated the Government 
requirements to the various lumber-producing regions of the coun- 
try, thereby preventing confusion in the placing and filling of Gov- 
ernment orders. 1 



1 War Industries Board Bulletin 43. Prices of Lumber, pp. 22-24. 
64 



RECENT PRICE MOVEMENTS. 65 

Through the efforts of the committee a conference was arranged 
in the spring of 1917 with representatives of the lumber industry 
for the purpose of providing machinery whereby Government orders 
might be placed with individual mills that could promptly and 
efficiently fill the orders. At the conference it was decided that since 
the Government did not possess adequate information relative to 
the character of timber and operating facilities of the mills, the 
most advisable method of accomplishing this purpose would be 
the organization of emergency bureaus in the various producing 
regions to act as distributors of orders given out by the Govern- 
ment. This arrangement provided that all mills in a given region 
could participate in Government orders handled by the bureau 
upon payment of a small fee for the upkeep of the organization and 
by furnishing the bureau with a statement as to stocks on hand and 
operating capacity. These bureaus allocated to the various mills 
those particular specifications which they were in a position to 
produce, and apparently delays in delivery were reduced and the 
Government's building program expedited. 

Prices for Government cantonment stock. — Next in importance 
after the ascertainment of the Government's lumber needs and the 
provision of means by which these needs were to be supplied was 
the question of prices at which the orders were to be filled. It was 
evident from the location of the majority of the training camps 
that the greater part of the Government's orders for cantonment 
stock would fall upon the southern pine lumber industry, because 
it was the nearest source of supply and its product was that pre- 
dominantly used in such construction. 

As the result of efforts of the lumber committee a price agree- 
ment with representatives of the southern pine industry respecting 
cantonment stock was reached on June 13, 1917. This agreement 
provided for an itemized price on all cantonment stock which 
would yield for all grades used an average of $20 per thousand feet. 
These prices were effective only on Government orders, the prices 
of lumber for civilian purposes being left unregulated until June 
15, 1918. For a considerable part of this time the fact - that prices 
for cantonment stock had been fixed, together with slack civilian 
demand, tended to regulate civilian prices as well as those on Gov- 
ernment orders. In the spring of 1918, however, civilian prices 
advanced until they were several dollars per thousand higher than 
those in effect on Government orders. The development of this 
situation made it seem necessary to regulate the prices on civilian 
as well as on Government orders, as it was felt by the War Industries 
Board that the production of lumber for civilian purposes ought 
not to be stimulated by high prices. 

The prices for cantonment stock agreed to on June 13, 1917, re- 
mained in effect until September 11, 1917, when there was a volun- 
tary reduction of $1 per thousand on 1-inch boards and 50 cents per 
thousand feet on 2-inch dimensions. On October 10 there was an- 
other reduction of 50 cents per thousand feet, and on November 11 
a still further reduction of 40 cents per thousand feet. These revised 
prices remained in effect until June 15, 1918, when the War In- 
dustries Board established an average mill-run price of $28 per 
thousand feet, applying on both Government orders and civilian 
purchases. Three months later, in September, 1918, the prices es- 



66 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

tablished on June 15 were, according to agreement, subject to re- 
vision. On September 23 slight revisions in certain item prices were| 
made, the average remaining at $28, and the schedule was made ap- 
plicable to all Government purchases, including the Emergency Fleet 
Corporation and other Government bodies that had previously been 
purchasing at less than regular schedule prices for the sizes and 
grades used under an early agreement between manufacturers and 
the Emergency Fleet Corporation. This schedule remained in effect 
until December 23, when it lapsed, and Government control over that 
section of southern pine prices covered by the agreement auto- 
matically ceased. 

Prices of Virginia and Carolina pine. — In the price agreements 
of June, 1918, long and short leaf Virginia and Carolina pine were 
treated separately from other southern pine. The prices agreed 
upon for lumber from this section went into effect at midnight June 
28, 1918, subject to revision three months later. These prices differed 
slightly from those on the remainder of southern pine described 
above, though the average was approximately $28 for run of the mill. 
On October 1, 1918, minor changes in the prices of certain items were 
made and the agreement continued to December 23, 1918, when it, 
too, lapsed and Government price control of the entire southern pine 
industry ceased. 

Prices for wooden-ship schedules. — With the inception of the 
Government's ship-building program it became necessary to purchase 
material for wooden ships. On May 28, 1917, an agreement was 
reached between the Shipping Board and the manufacturers of 
southern pine whereby the latter agreed to furnish the Government 
with lumber suitable for ship schedules at an average price of $35 
per thousand feet. This average price went into effect for 100 
schedules, each requiring about one and one-half million feet of 
lumber. On October 30, 1917, the average price was increased by 
agreement to $40 per thousand feet. This new price agreement pro- 
vided that each item be given a certain price. These item prices 
ranged from $22 per thousand feet for the low-grade stock to $100 
for the larger and more costly sizes. Later, owing to changes in the 
established schedules requiring heart specifications (known as sched- 
ule 23) , it became necessary to increase the prices on these items from 
$5 to $20 per thousand feet, depending upon their relative difficulty 
in manufacturing. When these prices went into effect the average 
price for the entire schedule was increased from $40 to $44.72 per 
thousand feet. No other price changes were made on wooden ship 
schedules until October 11, 1918, when the average price became 
$46.23, which was based upon item prices established by the War 
Industries Board, which became effective September 23, and con- 
tinued until December 23, 1918. 2 

From the above brief summary of the Government's activities re- 
specting prices of lumber it is evident that during about three- 
fourths of the period covered by this report the prices of southern 
pine lumber were under increasingly strict governmental control, be- 
ginning with the agreement of May 28, 1917, with the Shipping 
Board, by which the prices for wooden-ship schedules were estab- 

a War Industries Board Bulletin No. 43 (1919), "Prices of Lumber," pp. 23-28, and 
Report of the War Industries Board, "American Industry in tne War" (1921), pp. 
211-227. 



RECENT PRICE MOVEMENTS. 67 

lished, and extending by subsequent agreements with the Shipping 
Board and the War Industries Board to cover cantonment stock and 
other Government purchases, and finally in 1918 to civilian purchases 
also. Not only were prices regulated but production and use were 
restricted to an increasing extent through conservation orders, pri- 
ority regulations, and transportation embargoes, by which it was 
provided that the Government and industries vitally connected with 
the conduct of the war were to be supplied before less essential 
civilian needs. 

Section 2. Price history. 

Prices, 1913-1916. — Prior to the outbreak of the war in 1914 the 
general tendency of southern pine lumber prices had been downward 
during the year 1913. From the latter part of 1913 to August, 1914, 
there had been very little fluctuation or change in the level of prices. 
The outbreak of the war was immediately followed by a sharp reduc- 
tion in lumber prices. Exports, of which southern pine furnished 
nearly one-half, were greatly reduced and the industry entered upon 
a period of low prices that was not directly relieved, as was done in 
many other industries, by the placing of orders by European bellig- 
erents. Consequently throughout the later months of 1914 and the 
first half of 1915 southern pine lumber prices were low, though show- 
ing a slight tendency to increase. During the later months of 1915 
and the first two or three months of 1916 the price level rose until 
it was about the same as in the early months of 1913, but the increase 
was followed by a downward reaction during the middle of the year, 
though not to the level of the two years preceding the rise. Again, 
during the latter part of 1916 prices advanced somewhat, so that dur- 
ing the last quarter of the year the general price level was slightly 
higher than that prevailing in the middle of the year 1913. 3 

Prices, 1917-1921. — Chart 4 (facing p. 68) shows the actual price 
movements for five typical sizes and grades of southern pine lumber, 
by months, from January, 1917, to December, 1921, inclusive. All 
prices plotted in the graph are monthly averages of mill prices quoted 
in the lumber trade journals, preference being given to Hattiesburg, 
Miss., quotations when obtainable. When Hattiesburg quotations 
were lacking quotations for Alexandria, La., Kansas City, Mo., or 
Birmingham, Ala., have been used, preference being given to quo- 
tations for the last three markets in the order named. 

During the first two months of 1917 prices were fairly stable, but 
from March to July, 1917, there was a sharp tendency to advance. 
With the beginning of Government price control in July, 1917, the 
rapid advance was checked. During the period of increasing Gov- 
ernment price control, from July, 1917, to December, 1918, the tend- 
ency of prices was gradually upward for all grades, including those 
shown in the chart. Some grades, for instance ship timbers, showed 
greater increases, but on the whole the price movement of the sizes 
and grades shown is typical. 

The termination of Government control in December, 1918, oc- 
curred when the southern pine lumber industry was facing a period 
of uncertainty. Many Government contracts were still running, but 
it was evident that Government requirements would soon be greatly 

• War Industries Board Bulletin 43, Prices of Lumber, p. 57. 



68 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

reduced. With the termination of hostilities the public expected 
early and marked reductions in prices, but in this expectation failed 
to correctly forecast the future. Prices advanced sharply throughout 
the last half of 1919 and the early months of 1920 and attained levels 
very much higher than those of the war period. Referring to the 
chart, it will be seen that 1 inch by 3 inch edge grain flooring of A 
grade, which had during the war been quoted at from $47.63 to 
$51.06, advanced to $145.20 per thousand in May, 1920, an increase 
of nearly 200 per cent. No. 1 boards, that during the war averaged 
approximately $28, advanced to $89.05 per thousand in March, 1920, 
an advance of over 200 per cent. No. 2 fencing, which during the 
war sold at prices ranging from $17.75 to $25.94, advanced to $44.34 
per thousand in February, 1920, an advance of approximately 100 
per cent. The price advances for the remaining items in the graph 
showed increases similar to that for No. 2 fencing. 

The prices attained in the early months of 1920 were so high that 
the market refused to absorb the production. When the so-called 
buyers' strike made itself felt, prices fell rapidly from the spring 
and early summer of 1920 to February, 1921, except for a short 
period of stiffening prices in the late summer of 1920. In the spring 
of 1921 boards, fencing, timbers, and dimensions were but little if any 
higher than in January, 1917. High-grade flooring, which had ex- 
perienced the highest prices, failed to show a like decrease, as it 
halted in its downward course at $71.67 in March, 1921, a price nearly 
double that prevailing in January, 1917. 

The fall in prices occurring in 1920 started earlier on the lower 
grades, on which the price increase was less pronounced than on the 
higher grades, for which there was a greater demand. Reference to 
the chart shows that No. 2 fencing reached its peak in price in 
•February, 1920, No. 1 boards in March, and "A" grade edge grain 
flooring in May. The explanation for the slump in prices beginning 
earlier in the cheaper grades is that during the latter part of the war 
period the Government demand was mainly for high grades and large 
sizes for shipbuilding and other purposes. Consequently there was 
a considerable accumulation of low grades at the end of the war, par- 
ticularly of boards, fencing, and small dimensions, all along the line 
from the mill to the consumer. For this reason boards, fencing, and 
small dimensions were more responsive to the beginning of curtailed 
demand as prices advanced. 

In the spring and summer months of 1921 prices fluctuated some- 
what, but generally showed a downward tendency through August, 
following which there was a stiffening of demand, with a corre- 
sponding tendency of prices of all grades to advance somewhat. 

During the period covered by the price peak beginning about the 
middle of 1919 and ending with the first quarter of 1920 demand 
exceeded supply and the condition spoken of as a " seller's market " 
prevailed. Prices were high and rapidly advancing. Costs un- 
doubtedly increased somewhat, but of course not in proportion to the 
increase in prices. Consequently, earnings were undoubtedly higher 
than during the period of Government control, but to what extent 
it is impossible to state. 

The effect of this period of high prices was to stimulate increased 
production. Not only did established mills produce to capacity but 
it is estimated by the United States Forest Service that during 1919 



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RECENT PRICE MOVEMENTS. 69 

between 800 and 1,000 small mills began operations in the southern 
pine region alone. When demand decreased in 1921 through the 
so-called buyers' strike it was immediately found that there was 
excess producing capacity in operation. Mill stocks accumulated 
for a time, but soon had to be moved at greatly reduced prices. 

Freight rates are an important factor affecting the delivered price 
of lumber, thereby limiting the area within which southern pine can 
enter into price competition with lumber produced in other sections 
of the country, as well as the area within which lumber from other 
sections can compete on the basis of price with southern pine. Hence, 
the high freight rates prevailing after the drop in prices in 1921 
were, in addition to the decreasing demand and excess pro- 
ducing capacity, a material factor tending to limit the prices that 
could be obtained at the mills, as they prevented any great expansion 
of the southern pine market except at very much lower prices. In 
order to put southern pine on a price level with lumber from other 
regions producers were obliged, it is said, to absorb a part or all of 
the freight. Other regions, too, were seeking outlets for excess pro- 
duction and were experiencing the same difficulties. Consequently 
prices fell until they were, as reported in the trade press during the 
summer of 1921, but little, if any, higher on many sizes and grades 
than they were in January, 1917. 

As prices fell production was curtailed. This, taken by itself, 
would tend to increase unit costs. This tendency was perhaps more 
than counterbalanced by decreases in cost of supplies and labor in 
the latter part of 1921, but, according to the statements of those 
engaged in the industry, the net decrease in cost was much less than 
the decrease in prices, so that during the period of curtailed demand 
and production, reduced prices, and continued high costs, many mills, 
it is claimed, incurred losses that tended to absorb at least a part 
of their large earnings during the high-price period. To what ex- 
tent losses incurred offset previous high earnings has not been ascer- 
tained. 

In discussing the situation under date of September 5, 1921, The 
National Lumber Bulletin, official organ of the National Lumber 
Manufacturers' Association, pointed out that the cost of stumpage 
has increased in recent years, but quoted the average realization of 
southern pine mills at that time as being between $18 and $20 per 
thousand for mill-run lumber, an average price at least $1 less than 
that realized by the 205 companies in 1917 and something like $8 or 
$9 per thousand less than the average price under Government regu- 
lation in 1918. 4 It is further claimed that this price is no higher than 
that realized 14 or 15 years ago for lumber of the same grade and the 
same or similar species. 

A number of factors have prevented the public realizing the full 
extent of the 1921 decrease in mill prices, among which may be 
mentioned the increased cost of retailing and the high freight rates 
that must be paid to transport lumber from the comparatively re- 
mote producing areas to points of consumption, and the tendency 
of retailers who stocked their yards at high prices to hold up their 
prices until they had disposed of their high-priced stock. The first 
two factors mentioned tended to make necessary a wider spread or 

* See Table 19, p. 40 ; also p. 75. 



70 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

margin between the mill price and the retail price of lumber. The 
last-named factor tended to lengthen the period of decreased demand 
because, apparently, the public withheld buying so far as possible at 
the high retail prices asked, while retailers refused to buy until they 
disposed of their slow-moving, high-priced stock. The manufacturers 
criticized the retail trade sharply for not reducing prices, while the 
retail trade responded with the statement that retail prices had been 
reduced so far as consistent with increased freights and retail ex- 
penses. 

Proposed current reports. — During the early part of 1920 the 
Commission decided to resume the collection of data on lumber produc- 
tion, shipments, stocks, cost of production, and sales realization. Fol- 
lowing the temporary injunction granted in the Maynard case, respect- 
ing the Commission's power to require such reports from the coal 
industry, consideration was given to the advisability of requesting 
lumber manufacturers to submit voluntary reports. In order to devise 
a plan whereby current information on costs, production, stocks, etc., 
could be secured and promptly made available to both the public and 
the industry, the Commission held several conferences with representa- 
tives from the more important lumber-producing regions. The rep- 
resentatives attending these conferences promised to cooperate with 
the Commission, and the representatives of the various associations in 
the southern pine region took a very active part in the preparation 
of satisfactory schedules to be used for the collection of the neces- 
sary information. On account of the unsatisfactory results from the 
system of voluntary reporting in other industries, the Commission 
finally decided to postpone such work in the lumber industry until 
its power to require such reports is finally determined by the courts. 
Consequently the Commission is unable to include in this report the 
discussion of any data more recent than that of the year 1918. In- 
formation covering 1919 to 1921, inclusive, would undoubtedly be of 
great interest and value both to the industry and the public, as the 
lumber business, after a period of feverish activity during 1919 and 
the early months of 1920, experienced a period of depression in 1921, 
during which it has been claimed that much lumber was being sold 
at less than cost to manufacture, but no public agency has been in a 
position to answer the consumer's question as to whether the claim 
was well founded. 



APPENDIX. 



EXHIBITS. 



Exhibit 1. 

PRODUCTION, INVESTMENT, EARNINGS, AND RATES OF RETURN 
ON INVESTMENT FOR 143 SOUTHERN PINE LUMBER COM- 
PANIES, GROUPED BY STATES, 1917 AND 1918. 

Table 35 shows the total production, total investment, total earnings from all 
sources, and percentage rates of total earnings from all sources on total invest- 
ment for 143 southern pine companies, grouped by States, for 1917 and 1918. 
The 143 companies are those whose investments, earnings, and rates of earn- 
ings on investment are discussed in Chapter III. All figures shown are those 
reported by the companies. 

It will be noted that the greater number of the companies and the greater 
part of the total investment and earnings discussed were shown by companies 
located in the six States of the Gulf States group. It will also be noted that 
the highest rates of earnings were shown by companies in the above-named group. 
and the lowest rates by those in the three States of the Virginia-Carolina group. 

Table 35. — Production, investment, earnings, and rates of return on investment, 
as reported by 143 southern pine lumber companies, grouped by States, 1911 
and 1918. 





Companies. 


Product] 


on. 


Investment. 


Group and State. 


Num- 
ber. 


Per 

cent. 


Feet board 
measure. 


Per cent 
of total. 


Amount. 


Per cent 
of total. 


1917. 

Gulf States group: 

Alabama 


14 
18 
45 
22 
2 
15 


9.8 
12.6 
31.4 
15.4 

1.4 
10.5 


356, 480, 299 
569, 102, 058 
2, 179, 364, 745 
640, 109, 795 
137, 670, 210 
704, 550, 392 


6.8 
10.9 
41.7 
12.3 

2.6 
13.5 


$19, 152, 889. 77 
35, 733, 648. 55 

139, 753, 654. 91 

33, 229, 075. 95 

7, 474, 584. 74 

38, 928, 744. 85 


6.2 


Arkansas 


11.5 


Louisiana 


45 2 


Mississippi 


10.7 


Oklahoma 


2.4 


Texas 


12.6 






Total 


116 


81.1 


4, 587, 277, 499 


87.8 


274,272,598.77 


88.6 






Georgia-Florida group: 

Florida 


9 
4 


6.3 
2.8 


209, 056, 117 
59, 123, 799 


4.0 
1.1 


11, 376, 244. 00 
1, 544, 669. 47 


3.7 


Georgia 


.5 






Total 


13 


9.1 


268, 179, 916 


5.1 


12, 920, 913. 47 


4.2 






Virginia-Carolina group: 

Nnrth Caroling- » . , 


2 
7 
5 


1.4 
4.9 
3.5 


18, 582, 629 
103, 288, 702 
248, 479, 640 


.4 
2.0 
4.7 


463, 782. 85 

4, 597, 988. 44 

17,159,406.07 


.2 


finnth Carolina 


1.5 


Virginia 


5.5 






Total 


14 


9.8 


370, 350, 971 


7.1 


22, 221, 177. 36 


7.2 






Total all groups 


143 


100.0 


5,225,808,386 


100.0 


309, 414, 689. 60 


100.0 






1918. 

Gulf States group: 

Alabama 


14 
18 
45 
22 
2 
15 


9.8 
12.6 
31.4 
15.4 

1.4 
10.5 


272, 464, 558 
470, 927, 498 
1, 895, 681, 963 
575, 630, 289 
100, 344, 651 
593, 227, 395 


6.2 
10.6 
42.8 
13.0 

2.3 
13.4 


19, 815, 671. 37 
36, 488, 007. 65 
147, 593, 406. 98 
33, 243, 371. 65 
7, 185, 633. 63 
41,350,981.07 


6.2 


Arkansas. _. , , 


11.3 


Louisiana 


45.8 


Mississippi 


10.3 


Oklahoma 


2.2 


Texas 


12.9 






Total 


116 


81.1 


3, 908, 276, 354 


88.3 


285,677,072.35 


88.7 







71 



72 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

Table 35. — Production, investment, earnings, and rates of return, etc. — Contd. 





Companies. 


Production. 


Investment. 


Group and State. 


Num- 
ber. 


Per 

cent. 


Feet hoard 
measure. 


Per cent 
of total. 


Amount. 


Per cent 
of total. 


1918— Continued. 

Georgia- Florida group: 

Florida 


9 

4 


6.3 

2.8 


192,3*7,064 
56, 402, 455 


4.4 
1.3 


$10, 995, 799. 28 
1, 335, 593. 75 


3.4 


Georgia 


.4 






Total 


13 


9.1 


248, 749, 519 


5.7 


12, 331, 393. 03 


3.8 






Virginia-Carolina group: 

North Carolina 


2 

7 
5 


1.4 
4.9 
3.5 


13, 613, 282 

71, 017, 450 

182, 925, 700 


.3 
1.6 
4.1 


542. 943. 70 

6, 458; 505. 33 

17, 059, 461. 13 


.2 


South Carolina 


2.0 


Virginia.. 


5.3 






Total 


14 


9.8 


267, 556, 432 


6.0 


24, 060, 910. 16 


7.5 






Total all groups 


143 


100.0 


4, 421, 582, 305 


100.0 


322, 069, 375. 54 


100.0 









Companies. 


Earning 


s. 


Rate of 


Group and State. 


Num- 
ber. 


Per 

cent. 


Amount. 


Per cent 
of total. 


return on 
invest- 
ment. 


1917. 
Gulf States group: 

Alabama 


14 
18 
45 
22 
2 
15 


9.8 
12.6 
31.4 
15.4 

1.4 
10.5 


$1, 461, 391. 63 
3,389,619.11 

14, 062, 841. 48 

3, 189, 788. 51 

917, 533. 31 

3, 339, 343. 26 


5.2 
12.2 
50.4 
11.4. 

3.3 
12.0 


7.6 


Arkansas 


9.5 


Louisiana 


10.1 


Mississippi 


9.6 


Oklahoma 


12.3 


Texas 


8.6 






Total 


116 


81.1 


26, 360, 537. 30 


94.5 


9.6 






Georgia- Florida group: 

Florida 


9 

4 


6.3 
2.8 


971, 130. 54 
93, 739. 41 


3.5 
.3 


8.5 


Georgia 


6.1 






Total 


13 


9.1 


1, 064, 869. 95 


3.8 


8.2 






Virginia-Carolina group: 

North Carolina 


2 

7 
5 


1.4 
4.9 
3.5 


36, 636. 73 

348, 571. 26 

80, 433. 07 


.1 

1.3 

.3 


7.9 


South Carolina 


7.6 


Virginia 








Total 


14 


9.8 


465, 641. 06 


1.7 


2.1 






Total all groups 


143 


100.0 


27, 891, 048. 31 


100.0 


9.0 






1918. 
Gulf States group: 

Alabama 


14 
18 
45 
22 
2 
15 


9.8 
12.6 
31.4 
15.4 

1.4 
10.5 


1, 133, 980. 09 
3, 082, 236. 77 
14, 517, 448. 38 
3,323,916.31 
737, 778. 95 
2, 707, 635. 75 


4.2 
11.4 
53.5 
12.2 

2.7 
10.0 


5.7 


Arkansas 


8.4 


Louisiana 


9.8 


Mississippi 


10.0 


Oklahoma 


10.3 


Texas 


6.5 






Total 


116 


81.1 


25, 502, 997. 25 


94.0 


8.9 






Georgia-Florida group: 

Florida 


9 
4 


6.3 
2.8 


995, 975. 62 
68, 446- 07 


3.7 
.2 


9.1 


Georgia 


5.1 






Total 


13 


9.1 


1, 064, 421. 69 


3.9 


8.6 






Virginia-Carolina group: 

North Carolina 


2 
7 
5 


1.4 
4.9 
3.5 


44, 799. 24 
119, 123. 00 
399, 899. 06 


.2 

.4 

1.4 


8.3 


South Carolina 


1.8 


Virginia 


2.3 






Total 


14 


9.8 


563, 821. 30 


2.0 


2.3 






Total all groups 


143 


100.0 


27, 131, 240. 24 


100.0 


8.4 







APPENDIX. 



73 



Exhibit 2. 

INVESTMENTS, EARNINGS, AND RATES OF RETURN ON INVEST- 
MENT FOR 143 SOUTHERN PINE LUMBER COMPANIES BEFORE 
AND AFTER REVISION FOR APPRECIATION OF STUMPAGE IN 

INVESTMENT AND COSTS, 1917 AND 1918. 

Table 36 shows the total investment and earnings of 143 identical southern 
pine lumber companies discussed in Chapter III. The 143 companies are. sub- 
divided to show the investment and earnings of 86 companies whose reports 
showed no appreciation in either timber investment or costs and 57 companies 
showing appreciation in either or both investment and costs in one or both 
years. The 57-company group is again subdivided to show the results for 42 
identical companies whose reports showed appreciation in both investment and 
costs in both years and for 15 companies for which miscellaneous revisions for 
appreciation were made. The miscellaneous group includes companies for 
which revisions were made in both investment and costs in one year only or for 
which revisions were made in investment only or in costs only. 

The data shown represent the total investments reported in the balance sheets 
of the companies covering land and timber, plant and equipment, undivided sur- 
plus, and outside investments; the appreciated value (if any) in timber invest- 
ment ; the total earnings from lumber and outside investments ; the amount of 
appreciation (if any) in stumpage charged to costs, and finally the net invest- 
ment after deducting appreciation from land and timber investment, and the 
net earnings after adding back to earnings the amount of appreciation in stump- 
age charged to costs during the year. Percentage rates of earnings on invest- 
ment are shown before and after adjustment for appreciation for each group. 

Table 36. — Investments, earnings, and rates of return on investments before 
and after revisions for appreciation in timber investment and in lumber costs 
of lj3 southern pine lumber companies, 1917 and 1918. 



Classification and item. 



1917 



Investment. 



Earnings. 



Rates 
of re- 
turn on 
invest- 
ment. 



All companies (143): 

Investment and earnings as reported 

Appreciation 

Investment and earnings after revision 

86 companies showing no appreciation either in invest- 
ment or in costs 

57 companies showing appreciation: 

Investment and earnings as reported 

Appreciation 

-- Investment and earnings after revision 

A. 42 companies showing appreciation in both 

investment and costs in both years: 

Investment and earnings 

Appreciation 

Investment and earnings after revision 

B. 15 companies showing miscellaneous revision: 

Investment and earnings 

Appreciation 

Total investment and earnings after 
revision 



$309, 414, 689. 60 

30, 685, 989. 85 

278, 728, 699. 75 

160, 034, 917. 27 

149, 379, 772. 33 

30, 685, 989. 85 

118, 693, 782. 48 



123, 594, 105. 83 
27, 782, 865. 73 
95,811,240.10 

25, 785, 666. 50 
2, 903, 124. 12 

22, 882, 542. 38 



$27, 891, 048. 31 

4,411,299.81 

32,302,348.12 

13, 522, 994. 30 

14,368,054.01 

4, 411, 299. 81 

18,779,353.82 



12, 230, 918. 27 

4, 165, 026. 31 

16,395,944.58 

2, 137, 135. 74 
246, 273. 50 

'2,383,409.24 



9.0 

ii.6 

8.5 

9.6 

15.8 

9.9 



17.1 
8.3 



10.4 



74 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

Table 36. — Investments, earnings, and rates of return, etc. — Continued. 



Classification and item. 



1918 



Investment. 



Earnings. 



Rates 
of re- 
turn on 
invest- 
ment. 



All companies (143): 

Investment and earnings as reported 

Appreciation 

Investment and earnings after revision 

86 companies showing no appreciation either in invest- 
ment or in costs 

57 companies showing appreciation: 

Investment and earnings as reported 

Appreciation 

Investment and earnings after revision 

A 42 companies showing appreciation in both 
investment and costs in both years: 

Investment and earnings 

Appreciation 

Investment and earnings after revision 
B. 15 companies showing miscellaneous revision: 

Investment and earnings 

Appreciation 

Total investment and earnings after 
revision 



$322, 069, 375. 54 

32, 801, 294. 83 

289, 268, 080. 71 

162, 589, 666. 62 

159, 479, 708. 92 

32, 801, 294. 83 

126, 678, 414. 09 



133, 100, 256. 67 

29, 815, 912. 07 

103, 284, 344. 60 

26, 379, 452. 25 
2, 985, 382. 76 

23,394,069.49 



$27, 131, 240. 24 

4, 319, 236. 82 

31, 450, 477. 06 

13,064,222.98 

14, 067, 017. 26 
4, 319, 236. 82 

18, 386, 254. 08 



12, 406, 532. 96 

3,997,512.30 

16,404,045.26 

1,660,484.30 
321, 724. 52 

1, 982, 208. 82 



8.4 

i6.*9 

8.0 

8.8 

'ii'5 

9.3 



15.9 
6.3 



8.5 



Exhibit 3. 

Table 37. — Total investment and earnmgs as reported by southern pine lumber 
companies, by territorial groups, 1911 and 1918. 



Group. 



Year. 



Num- 
ber of 
com- 
panies. 



Total investment. 



Total earnings. 



Rates of 
return 

on 
invest- 
ment. 



Gulf States 

Georgia- Flori da . . 
Virginia-Carolina 
All groups 



1917 
1918 
1917 
1918 
1917 
1918 
1917 
1918 



128 

117 

15 

13 

14 

14 

157 

144 



$291,307, 

286,353, 

13,644, 

12,331, 

22, 221, 

24,060, 

327, 173, 

322, 745, 



590. 71 
025. 55 
632. 10 
393. 03 
177. 36 

910. 16 

400. 17 
328. 74 



$27, 883, 536. 87 

25,713,647.16 

1,117,064.88 

1,064,421.69 

465,641.06 

563, 821. 30 

29, 466, 242. 81 

27,341,890.15 



9.6 
9.0 
8.2 
8.6 
2.1 
2.3 
9.0 
8.5 



Exhibit 4. 



AVERAGE COST OF SALES, SALES REALIZATION, AND EARNINGS 
AS REPORTED BY 205 SOUTHERN PINE LUMBER COMPANIES, 
1917 AND 1918. 

- The averages per thousand feet board measure for cost of sales, sales 
realization, and earnings on lumber and from other sources for 205 companies 
discussed in Chapter IV are based on the footages and amounts shown in this 
exhibit. Four groupings of companies identical with those discussed in Chapter 
IV are shown, namely, average of all groups (205 companies) ; Gulf States 
group (156 companies) ; Georgia-Florida group (24 companies), and Virginia- 
Carolina group (25 companies). 

The unit per thousand feet shown in the table for each item is obtained 
by dividing the total amount for the item by the total sales. Average sales 
realization is based on total sales, less returns, allowances, etc. Cost of sales 
includes total cost of stumpage, logging, manufacturing, general and adminis- 
tration, shipping, and selling expenses. Earnings from other sources include 



APPENDIX. 



75 



earnings from by-products where by-product costs were separable from lumber 
costs ; interest and dividends from securities of other companies, Government 
bonds, etc. ; income from commissaries, rent of houses, farms, outside invest- 
ments, and any other items of income, less expenses, depreciation, and losses 
not directly chargeable to lumber costs and therefore not included elsewhere 
in the reports. Total earnings represent the total income from all sources, 
including lumber operations and outside investments of all sorts. Deductions 
from earnings include interest on funded debt, interest on other loans, and 
income and excess profits taxes. These deductions subtracted from the total 
earnings from all sources yield the net income after deductions. 

Table 38. — Average cost of sales, sales realization, and earnings from lumber 
and other sources as reported by 205 southern pine lumber companies, 1911 
and 1918. 





1917 


1918 


Group and item. 


Quantity and 
value. 


PerM 

feetB.M. 


Quantity and 
value. 


PerM 
feetB.M. 


Gulf States group (156 companies): 

Quantity sold (feet board measure) 


5,702,619,348 

$119,065,865.55 

93, 722, 845. 31 




5, 100, 593, 056 

$135, 115, 661. 48 

111, 569, 809. 88 






$20. 88 
16.44 


$26.49 




21.87 






Earnings from lumber 


25, 343, 010. 24 
5, 235, 540. 78 


4.44 
.92 


23, 545, 851. 60 
5, 250, 163. 98 


4.62 


Earnings from other sources 


1.03 








30, 578, 551. 02 
5,604,233.97 


5.36 
.98 


28,796,015.58 
7, 162, 559. 87 


5.65 


Deductions from earnings 


1.41 






Net earnings after deductions 


24, 974, 317. 05 


4.38 


21,633,455.71 


4.24 






Georgia- Florida group (24 companies): 

Quantity sold (feet board measure) 


431,915,963 

$8,673,649.10 

7,538,699.60 




391, 996, 592 

$10, 084, 488. 52 

9, 009, 944. 20 




Realization 


$20. 08 
17.45 


$25. 73 


Cost of sales 


22.99 






Earnings from lumber 


1, 134, 949. 50 
249, 120. 46 


2.63 
.58 


1,074,-544.32 
223, 142. 97 


2.74 


Earnings from other sources 


.57 






Total earnings *. 


1,384,069.96 
428, 315. 79 


3.21 
1.00 


1,297,687.29 
508, 406. 33 


3.31 


Deductions from earnings 


1.30 






Net earnings after deductions 


955, 754. 17 


2.21 


789, 280. 96 


2.01 






Virginia-Carolina group (25 companies): 

Quantity sold (feet board measure) 


626,750,634 

$12, 713, 589. 04 

11, 851, 511. 02 




468, 534, 043 

$13, 649, 377. 59 

13,204,527.72 




Realization 


$20. 29 
18.91 


$29.13 


Cost of sales 


28.18 






Earnings from lumber 


862, 078. 02 
277, 235. 27 


1.38 
.44 


444, 849. 87 
210, 570. 86 


.95 


Earnings from other sources 


.45 






Total earnings 


1,139,313.29 
540, 052. 51 


1.82 
.86 


655,420.73 
578, 117. 30 


1.40 


Deductions from earnings 


1.23 






Net earnings after deductions 


599, 260. 78 


.96 


77, 303. 43 


.17 






All groups (205 companies): 

Quantity sold (feet board measure) 


6,761,285,945 

$140, 453, 093. 69 

113,113,055.93 




5,961,123,691 

$158, 849, 527. 59 

133, 784, 281. 80 




Realization 


$20. 77 
16.73 


§26. 65 




22.44 






Earnings from lumber 


27,340,037.76 
5, 761, 896. 51 


4.04 
.85 


25, 065, 245. 79 
5,683,877.81 


4.21 


Earnings from other sources 


.95 






Total earnings 


33, 101, 934. 27 
6,572,602.27 


4.89 
.97 


30, 749, 123. 60 
8,249,083.50 


5.16 


Deductions from earnings 


1.38 






Net earnings after deductions 


26,529,332.00 


3.92 


22, 500, 040. 10 


3.78 







76 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

Exhibit 5. 

COSTS BY OPERATIONS, AS REPORTED BY 205 SOUTHERN PINE 
LUMBER COMPANIES, 1917 AND 1918. 

Table 39 shows the consolidated figures on which the unit cost for stumpage, 
logging, manufacturing, general and administrative expense, etc., for 205 
companies discussed in Chapter IV are based. 

Stumpage. — The figures shown for stumpage represent the total footages and 
values reported in response to the Commission's instructions during the war to 
compute the cost of stumpage in the following manner : 

" The amount of depletion cost (" stumpage ") is a fixed rate per M feet which 
if possible should be ascertained by dividing the original cost of the timber 
land owned, less the value of surface or cut-over lands by the estimated yield 
of timber at the time the timber was purchased (assuming the quantity is reason- 
able). To this such carrying costs as taxes on a reasonable amount of timber 
may be added, but not interest. (Interest will be allowed as a return on in- 
vestment.) If depletion cost can not be ascertained, the book figure for stump- 
age as of December 31, 1916, may be given and entered on line 10 in red. Any 
timber land purchased since December 31, 1916, should be entered at the actual 
net purchase price. No depletion is to be figured on timber from leased lands or 
lands held under option (but expense charged on the basis of the amount paid 
for the option)." 

A considerable number of companies reported different footages for stumpage 
and logging. In some cases this difference appears to be due to logs pur- 
chased, while in others it is totally unexplained. The figures therefore are 
shown as reported without definite attempt to explain the difference for all 
companies of approximately 140,000,000 feet shown between the two items. 
This difference is, however, small, amounting to only about 2 per cent of the 
footage logged and manufactured. 

Logging. — The logging cost shown includes all expenses reported as incurred 
in clearing and swamping, felling, cutting, scaling, hauling, skidding and load- 
ing, depreciation on logging equipment, transportation, depreciation on trans- 
portation equipment, camp expense (net), and miscellaneous logging expense. 
Many reports showed considerable unexplained differences between footages 
against different items of logging expense, indicating either inventories or differ- 
ences in scaling at different points, regarding which no explanations were made. 
Some reports showed only the footage of logs delivered to the pond or log yard. 
Consequently it was necessary in computing logging costs for such mills for 
both years to use this footage in computing the average logging cost. 

Manufacturing. — Many companies failed to report inventories of logs in pond 
or log yard at the beginning or end of the year. Wherever inventories were 
reported they have been given full consideration in arriving at the footage 
cut and the total manufacturing cost. In all cases in which inventories were 
not reported the total cost has been divided by the reported sawmill cut to 
obtain the average manufacturing cost. 

The total sawmill cost includes the expenses of the pond or log yard, saw- 
mill, green sorter, stackers, trucking to dry kiln, dry kiln expense, dry sorter, 
rough shed, yard, planing mill, finished shed, sizer, timber dock, depreciation 
of sawmilling equipment, and miscellaneous sawmill expense. 

General and administrative expense. — This item includes salaries, office ex- 
penses, taxes (except income and excess-profits taxes), insurance, deprecia- 
tion on office buildings and equipment, office repairs and other general expenses. 
The average figure shown in the table is obtained by dividing the total general 
and administrative expense reported by the sawmill cut. 

Shipping and selling expenses. — Shipping expense includes all expenses inci- 
dent to handling lumber from piles to cars. Selling expense includes sales- 
men's salaries and expenses, commissions, advertising, salaries of order and 
invoice clerks, and other items of expense incident to marketing the product. 

In computing the average for both of these items, the total expense has been 
divided by the footage of lumber shipped. It was found necessary to use 
lumber shipped rather than lumber sold in computing selling expenses because 
lumber shipped was more consistently reported than lumber sold. 

Net cost to produce and sell. — The total cost to produce and sell is obtained 
by adding together the various unit costs obtained as described above. About 
40 per cent of the companies carried on by-product operations, the costs of 



APPENDIX. 



77 



which were not segregated from lumber costs. In the aggregate the average 
income from by-products for such companies (obtained by dividing the total 
income from by-products of companies not segregating by-product costs from 
lumber costs by the total lumber production of all companies) was small in 
both years. The net cost to produce and sell is obtained by deducting the 
small item for income from by-products from the average total cost secured 
by adding together the various unit costs. The net cost obtained in this way 
may differ slightly from the true cost to produce and sell because of unrecon- 
ciled inventory differences. In many cases the errors for different companies 
tend to offset each other. From a study of a number of companies whose 
departmental costs could be computed both with and without inventory adjust- 
ments, it is estimated that the percentage error by which the costs as shown 
for different groups may vary above or below the true cost to produce and sell 
will probably not exceed 2 per cent. 

Table 39. — Costs, by operations, as reported by 205 southern pine lumber 

companies, 1917 and 1918. 



Group and item. 



Gulf States group (156 com- 
panies): 

Stumpage 

Logging 

Manufacturing 

General and administra- 
tive 

Shipping 

Selling 

By-products 



Net cost to produce and 
sell 



G eorgia-Florida group (24 
companies): 

Stumpage 

Logging 

Manufacturing 

General and administra- 
tive 

Shipping 

Selling 

By-products 



Net c st to produce and 
sell 



Virginia-Carolina group (25 
companies): 

Stumpage 

Logging 

Manufacturing 

General and administra- 
tive 

Shipping 

Selling 

By-products 



Net cost to produce and 
seU 



All groups (205 companies): 

Stumpage 

Logging 

Manufacturing 

General and administra- 
tive 

Shipping 

Selling 

By-products 



Net cost to produce and 
seU 



1917 



Footage 
B. M. 



5,498,311,156 
5, 524, 535, 282 
5, 551, 767, 449 

5, 551, 767, 449 
5, 702, 619, 348 
5,702,619,348 
5, 551, 767, 449 



Tctal cost. 



$25, 596, 587. 51 
24, 547, 662. 09 
24, 894, 734. 29 

12,811,329.55 
2, 734, 230. 18 
3, 123, 168. 28 
1530,658.7/ 



93,177,053.13 



Cost 
per M. 



$4.66 
4.44 
4.48 

2.31 

.48 

.55 

1.10 



16.82 



452, 602, 404 
453, 012, 933 
445, 729, 641 

445, 729, 641 
431, 915, 963 
431, 915, 963 
445, 729, 641 



1, 895, 658. 49 
2,506,783,92 
2, 296, 234. 58 

90S, 374. 24 

148, 648. 06 

210, 484. 93 

1 133, 535. 25 



7,832,649.97 



4.19 
5.53 
5.15 

2.04 
.34 

.49 

1.30 



17.44 



609, 514, 265 
607, 851, 148 
608,311,984 

608,311,984 
626,750,634 
626, 750, 634 
608, 311, 984 



2, 002, 431. 27 
4, 054, 382. 42 
3, 792, 557. 45 

1, 614, 691. 74 
201, 386. 75 
395, 203. 48 
1 94, 324. 76 



11,966,328.35 



3.29 
6.67 
6.23 

2.65 
.32 
.63 

1.16 



19.63 



6, 560, 427, 826 
6, 585, 399, 363 
6, 605, 809, 074 

6, 605, 809, 074 
6, 761, 285, 945 
6, 761, 285, 945 
6, 605, 809, 074 



29, 494, 677. 27 
31, 108, 828. 43 
30, 983, 526. 32 

15, 334, 395. 53 
3, 084, 264. 99 
3,728,856 69 
i 758, 518. 78 



112,976,031.45 



4.50 
4.72 
4.69 

2.32 
.46 
.55 

i.ll 



17.13 



1918 



Footage 
B. M. 



4, 710, 018, 754 
4, 714, 966, 159 
4, 708, 162, 562 

4, 708, 162, 562 
5, 100, 593, 056 
5, 100, 593, 056 
4, 708, 162, 562 



Total cost. 



$23, 851, 813. 26 
30, 866, 811. 06 
31, 899, 317. 73 

14, 460, 726. 19 
3, 488, 260. 28 
3, 504, 515. 04 
i 419, 495. 41 



107,651,948.15 



393, 140, 366 
393, 617, 259 
391,603,393 

391, 603, 393 
391, 996, 592 
391, 996, 592 
391, 603, 393 



1, 706, 449. 49 
3, 167, 115. 33 
2, 850, 036. 67 

1, 032, 067. 10 
210, 506. 45 
206, 846. 32 

1 147, 223. 93 



9,025,797.43 



Cost 
per M. 



$5. 06- 
6.55 
6.78- 

3.07 
.68 

.e,9 

1.09 



22.74 



4.34 
8.05 
7.28 

2.64 
.54 

.53 
1.38 



23.00 



443, 798, 874 
442, 805, 970 
443, 142, 267 

443, 142, 267 
468, 534, 043 
468, 534, 043 
443, 142, 267 



1, 625, 747. 26 
4, 728, 238. 50 
4, 245, 759. 94 

1, 882, 256. 76 
237, 267. 04 
366, 163. 52 

1 118, 535. 01 



12, 966, 898. 01 



3.66 

10.68 

9.58 

4.25 
.51 

.78 
1.27 



29.19 



5, 546, 957, 994 
5, 551, 389, 388 
5, 542, 90S, 222 

5, 542, 90S, 222 
5, 961, 123, 691 
5, 961, 123, 691 
5, 542, 908, 222 



27, 184, 010. 01 
38, 762, 164. 89 
38, 995, 114. 34 

17, 375, 050. 05 
3, 936, 033. 77 
4, 077, 524. 88 
i 685, 254. 35 



129,644,643.59 



4.90 
6.98 
7.04 

3.13 
.66 
.68 

1.12 



23.27 



Deduct. 
105332 c 



-22- 



78 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Exhibit 6. 

NET COST TO PRODUCE AND SELL, BY OPERATIONS, AS RE- 
PORTED BY 205 SOUTHERN PINE LUMBER COMPANIES FOR 1918. 

Table 40 shows the net cost to produce and sell, subdivided to show stumpage, 
logging, manufacturing, and general and administrative expenses (including 
shipping and selling), for 205 individual companies for the year 1918, as shown 
graphically in Chart 3, facing page 56. These costs are computed as explained 
under Exhibit 5. 

Table 40. — Costs, by operations, per thousand feet, as reported by 205 southern 
pine lumber companies, arranged, from low to high on net cost to produce and 
sell in 1918. 1 



Company No. 


Stump- 
age. 


Logging. 


Manufac- 
turing. 


General 
and admin- 
istrative 
expense, 
including 
shipping 
and selling. 


Net cost 
to pro- 
duce and 
sell. 


1 to 10 per cent of production: 

1 


$5.05 
4.15 
3.75 
6.28 
4.42 
4.19 
4.00 
6.52 
4.00 
5.30 
4.17 
1.50 
5.26 

6.10 

4.05 
4.70 
4.12 
5.00 
5.52 
5.42 
4.63 
5.73 
4.20 
2.80 
5.25 
5.28 
3.16 
4.24 
5.00 
4.46 

5.00 
5.02 
3.00 
6.49 
6.00 
3.38 
4.04 
4.00 
5.00 
4.46 
1.92 
3.00 
5.00 
5.00 
5.31 
5.00 
4.46 
4.00 
4.39 
4.60 

3.46 
5.64 
3.86 
.79 
3.69 
5.45 
5.42 


$3. 24 
5.52 
4.69 
3.88 
3.09 
4.36 
6.19 
4.72 
3.69 
4.42 
3.71 
4.00 
4.17 

3.55 
7.87 
3.60 
3.37 
3.22 
3.14 
3.17 
4.90 
5.42 
6.75 
8.56 
5.00 
4.87 
8.37 
4.54 
4.16 
4.20 

6.90 
5.11 
6.69 
4.97 
5.37 
8.09 
8.66 
7.50 
7.16 
4.08 
9.41 
8.12 
6.44 
4.31 
8.52 
8.25 
7.06 
8.84 
5.71 
7.15 

7.00 
7.51 
7.56 
11.77 
7.74 
6.76 
3.21 


$5.83 
4.89 
3.76 
4.73 
6.50 
6.52 
5.87 
3.66 
6.09 
4.58 
5.59 

11.81 
6.47 

5.80 
4.16 
5.51 
8.06 
6.36 
4.76 
4.95 
6.56 
5.78 
5.12 
5.66 
5.76 
5.85 
5.30 
6.27 
5.44 
8.32 

5.27 
6.78 
10.12 
5.37 
5.39 
5.33 
5.44 
6.12 
5.73 
7.74 
6.23 
7.03 
4.57 
5.65 
4.95 
5.52 
7.52 
5.47 
5.59 
6.29 

6.37 
4.71 
4.68 
7.61 
6.98 
6.21 
7.11 


$2.18 
1.99 
4.66 
2.53 
3.58 
2.56 
1.61 
3.19 
4.45 
4.19 
5.11 
1.32 
2.76 

3.24 
2.60 
4.89 
3.37 
4.43 
5.66 
5.54 
3.09 
2.27 
3.14 
2.43 
3.54 
3.84 
3.02 
4.81 
5.29 
2.95 

3.11 

3.42 
.60 
4.62 
3.74 
3.70 
2.47 
3.01 
2.76 
4.45 
3.17 
2.71 
4.89 
5.99 
2.21 
2.25 
2.11 
2.90 
5.60 
3.29 

4.50 
3.50 
5.26 
* 1.27 
3.08 
3.12 
5.87 


$16. 30 


2 


16.55 


3 


16.86 


4 


17.42 


5 


17.59 


6 


17. 63 


7 


17.67 


8 


18.09 


9 


18.23 


10 


18.49 


11 


18.58 


12 


18.63 


13 


18.66 


10 to 20 per cent of production: 

14 


18.69 


15 


18.69 


16 : 


18.70 


17 


18. 92 


18 


19.01 


19 


19.08 


20 


19.08 


21 


19.18 


22 


19.20 


23 


19.21 


24 


19.45 


25 


19.55 


26 


19.84 


27 


19. 85 


28 


19.86 


29 


19.89 


30 , 


19.93 


20 to 30 per cent of production: 

31 


20.28 


32 


20.33 


33 


20.41 


34 


20.45 


35 


20.50 


36 


20.50 


37 


20.61 


38 


20.63 


39 


20.65 


40 


20.73 


41 


20.73 


42 


20.86 


43 


20.90 


44 


20.95 


45 


20.99 


46 


21.02 


47 


21.15 


48 


21.21 


49 


21.29 


50 


21.33 


30 to 40 per cent of production: 

51 


21.33 


52 


21.36 


53 


21.36 


54 


21.44 


55 


21.47 


56 


21.54 




21.61 



1 40 per cent of by-products earnings were deducted from general and administrative and 60 per cent 
from manufacturing on each company reporting by-products sales. 



APPENDIX. 



79 



Figure 40. — Costs, by operations, per thousand feet, etc. — Continued. 



Company No. 



30 to 40 per cent of production — Continued. 

58 

59 

60 

61 

62 

63 

64 

65 

66 

67 

40 to 50 per cent of production: 

68 

69 

70 

71 

72 

73 

74 

75 

76 

77 

78 

79 

80 

81 

82 

83 

84 

85 

86 

50 to 60 per cent of production: 

87 

88 

89 

90 

91 

92 

93 

94 

95 

96 

97 

98 

99 

100 

60 to 70 per cent of production: 

101 

102 

103 

104 

105 

106 

107 

108 

t09 

110 

Ill 

112 

113 

114 

115 

116 

117 

118 

119 

120 

121 

70 to 80 per cent of production: 

122 

123 

124 

125 

126 

127 

128 

129 

105332°— 22 7 



Stump- 
age. 



$4.86 
5.42 
2.53 
5.12 

4.48 



,37 
,42 
.00 
6.24 
5.89 
6.81 
4.00 
4.45 
6.96 
5.42 
2.33 
5.00 
6.11 
3.55 
4.10 
7.72 

5.66 
4.96 
4.47 
5.43 
4.12 
4.92 
7.54 
4.97 
4.00 
4.00 
4.76 
5.00 
6.31 
5.27 

5.91 
7.00 
4.38 
4.87 
3.60 
5.00 
5.33 
5.42 
5.00 
4.55 
3.50 
2.60 
5.00 
3.73 
5.00 
6.28 
7.80 
2.00 
6.44 
4.78 
5.00 

5.38 
5.76 
7.23 
6.16 
2.73 
2.34 
3.37 
5.42 



Logging. 



$6.59 
4.31 
9.33 
3.23 
7.33 
7.68 
5.97 
7.96 
7.30 
5.53 

4.93 
6.78 
5.63 
7.93 
6.38 
4.71 
5.05 
5.58 
4.94 
7.65 
6.61 
7.22 
6.56 
7.40 
6.80 
10.55 
9.40 
8.17 
5.49 

5.82 
7.34 
8.91 
4.82 
6.30 
9.68 
6.13 
7.10 
7.42 
8.33 
4.78 
6.84 
6.80 
8.04 

6.91 
6.68 
8.31 
6.98 
9.64 
7.54 
8.62 
6.15 
8.11 
6.68 
8.38 
8.13 
8.02 
6.83 
9.59 
6.30 
5.20 
7.33 
7.50 
7.21 
8.11 

7.06 

9.00 

5.02 

5.72 

10.29 

11.75 

10.55 

6.33 



Manufac- 
turing 



$6.28 
5.82 
7.45 
5.50 
6.84 
6.06 
5.36 
6.73 
7.82 
4.68 

5.40 
5.91 
7.14 
6.08 
5.06 
5 16 
6.61 
8.19 
5.54 
7.86 
5.19 
6.00 
5.71 
5.05 
7.20 
4.85 
5.29 
6.15 
6.02 

6.04 
7.02 
6.92 
6.58 
7.11 
5.31 
5.14 
7.22 
8.37 
5.80 
7.68 
7.23 
7.35 
8.37 

5.57 
5.18 
7.14 
6.49 
7.80 
8.41 
6.40 
5.94 
5.80 
9.63 
9.35 
6.77 
7.78 
12.58 
6.74 
6.90 
5.74 
9.15 
8.18 
9.13 
7.15 

7.53 
5.55 
7.56 
5.55 
8.08 
8.24 
6.38 
7.11 



General 
and admin- 
istrative 
expense, 
including 
shipping 
and selling 



S3. 90 
6.09 
2.36 
7.85 
3.09 
2.83 
4.99 
2.45 
3.71 
6.20 

4.72 
2.49 
4.54 
4.86 
3.74 
5.76 
4.83 
3.07 
5.49 
3.31 
6.59 
2 66 
5.19 
8.14 
3.96 
1.58 
4.88 
4.76 
3.95 

5.67 
3.93 
2.97 
6.54 
5.86 
3.54 
4.64 
4.22 
3.77 
5.46 
6.53 
4.70 
3.36 
2.18 

5.47 
5.04 
4.10 
5.64 
2.99 
3.19 
3.81 
6.66 
5.27 
3.35 
3.02 
6.79 
3.49 
1.18 
3.15 
5.02 
5.81 
6.19 
2.56 
3.58 
4.51 

4.81 
4.56 
5.07 
7.46 
3.81 
2.65 
4.72 
6.16 



Net cost 
to pro- 
duce and 
sell. 



$21.63 
21.64 
21.67 
21.70 
21.74 
21.90 
21.90 
21.94 
21.98 
22.00 

22.05 
22.18 
22.10 
22.29 
22 64 
22.63 
22.73 
22.73 
22.78 
22.82 
22 84 
22.84 
22 88 
22.92 
22.96 
23.09 
23.12 
23.18 
23.18 

23.19 
23.25 
23.27 
23.37 
23.39 
23.45 
23.45 
23.51 
23.56 
23.59 
23.75 
23.77 
23.82 
23.86 

23.86 
23.90 
23.93 
23.98 
24.03 
24.14 
24.16 
24.17 
24.18 
24.21 
24.25 
24.29 
24.29 
24.32 
24.48 
i4.50 
24.55 
24.67 
24.68 
24.70 
24.77 

24.78 
24.87 
24.88 
24.89 
24.91 
24.98 
25.02 
25.02 



80 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 
Figure 40. — Costs, oy operations, per thousand feet, etc. — Continued. 



Company No. 


Stump- 
age. 


Logging. 


Manufac- 
turing., 


General 
and admin- 
istrative 
expense, 
including 
shipping 
and selling. 


Net cost 
to pro- 
duce and 
sell. 


70 to 80 per cent of production — Continued. 

130 


$6.56 
5.68 
2.83 
5.00 
5.00 
5.05 
5.00 
2.50 
9.45 
4.72 
3.66 
4.86 
2.00 
2.48 
3.92 
4.88 

2.18 
4.52 
4.00 
2.82 
5.00 
5.00 
7.50 
4.80 
6.00 
4.00 
5.00 
5.00 
4.99 
2.93 
6.07 
8.36 
5.12 
5.00 
6.16 
5.19 
1.09 
7.00 
4.58 
5.56 
2.96 
4.25 
5.43 
1.95 

3.12 
3.13 
6.44 
4.56 
4.00 
5.00 
5.53 
4.47 
8.17 
5.12 
7.87 
2.52 
6.00 
3.50 
4.00 
5.49 
7.00 
3.63 
3.93 
2.73 
3.80 
2.75 
4.26 
2.95 
2.60 
3.22 
5.01 
6.99 
5.70 
4.00 
6.00 
4.69 


$9.12 
8.35 

13.37 
6.48 
7.03 
8.86 
8.31 

11.84 
4.83 
8.22 
7.92 
8.51 
7.25 

13.43 
8.37 
7.63 

10.09 
7.74 
9.83 

11.20 
7.62 

10.91 
6.78 
9.88 
9.45 

10.14 
8.39 
8.72 
7.81 

12.25 

10.70 
6.91 
9.58 
7.40 
7.32 
8.80 

10.04 
9.68 
9.31 

14.14 
9.32 
7.15 
8.94 

13.83 

13.06 

6.26 

10.42 

7.49 

8.93 

9.82 

8.08 

10.87 

10.11 

8.82 

8.98 

11.33 

9.15 

8.46 

7.62 

7.39 

10.60 

14.30 

11.90 

15.12 

8.29 

15.32 

9.75 

10.51 

14.31 

13.90 

14.07 

6.67 

13.31 

13.38 

12.28 

17.42 


$7.37 
7.56 
7.07 
5.88 
6.28 
7.78 
7.27 
7.14 
5.51 
8.39 
9.81 
7.95 
8.53 
6.33 
8.40 
8.53 

8.60 
10.03 
9.92 
7.41 
9.52 
7.59 
8.72 
8.63 
6.59 
6.11 
9.05 
9.85 
8.33 
9.50 
5.93 
8.31 
8.99 
9.60 
9.46 
7.28 
6.19 
8.62 
7.43 
5.54 
8.51 
7.58 
9.35 
6.35 

6.42 

13.53 

7.75 

9.65 

8.02 

6.23 

8.54 

7.56 

6.39 

8.80 

7.57 

9.13 

7.48 

10.43 

10.44 

12.57 

8.18 

7.99 

10.62 

7.05 

6.52 

9.60 

8.28 

13.55 

10.25 

9.06 

10.02 

12.03 

10.83 

12.94 

10.17 

10.76 


$2.05 
3.57 
1.92 
7.83 
6.98 
3.67 
4.81 
3.99 
5.69 
4.22 
4.22 
4.34 
7.90 
3.44 
5.11 
4.83 

5.16 

3.78 
2.36 
4.71 
4.09 
2.85 
3.50 
3.20 
4.49 
6.31 
4.12 
3.39 
5.93 
2.39 
4.40 
3.55 
3.46 
5.16 
4.32 
6.04 
6.07 
2.13 
6.13 
2.23 
6.97 
8.88 
4.14 
5.78 

5.31 
5.10 
3.57 
6.50 
7.34 
7.24 
6.16 
5.47 
3.78 
5.96 
4.30 
5.78 
6.30 
6.67 
7.09 
3.73 
3.74 
4.01 
3.70 
5.30 
12.63 
3.84 
9.54 
*.99 
5.03 
6.41 
4.68 
8.49 
6.08 
5.70 
8.09 
5.31 


$25 11 


131 


25 16 


132 


25 19 


133 


25 19 


134 


25 29 


135 


25 36 


136 


25 39 


137 


25 47 


138 


25 48 


139 


25 55 


140 


25 61 


141 


25 66 


142 


25 68 


143 


25 68 


144 


25 80 


145 


25 87 


80 to 90 per cent of production: 

146 


26 03 


147 


26 07 


148 


26 11 


149 


26 14 


150 


26.23 


151 


26 35 


152 


26 50 


153 


26.51 


154 


26.53 


155 


26.56 


156 


26.56 


157 


26 96 


158 , 

159 


27.06 
27.07 


160 


27.10 


161 


27.13 


162 


27.15 


163 


27.16 


164 


27.26 


165 


27.31 


166 


27.39 


167 


27.43 


168 


27.45 


169 


27.47 


170 


27.76 


171 


27.86 


172 


27.86 


173 


27.91 


90 to 100 per cent of production: 

174 


27.91 


175 


28.04 


176 


28.18 


177 


28.20 


178 


28.29 


179 


28.29 


180 


28.31 


181 


28.37 


182 


28.45 


183 


28.70 


184 i 


28.72 


185 


28.76 


186 


28.93 


187 


29.06 


188 


29.15 


189 


29.18 


190 


29.52 


191 


29.93 


192 


30.15 


193 


30.20 


194 


31.24 


195 


31.51 


196 


31.83 


197 


32.00 


198 


32.19 


199 


32.59 


200 


33.78 


201 


34.18 


202 


35.92 


203 


36.02 


204 


36.54 


205 


38.18 







APPENDIX. 



81 



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cd 



APPENDIX. 83 

Exhibit 8. 

COSTS, SALES REALIZATION, AND PROFITS AS REPORTED BY 
INDIVIDUAL COMPANIES, 1917 AND 1918. 

Tables 42 and 43 show cost of sales, sales realization, profits from lumber and 
profits from all sources per thousand feet of lumber sold, for 205 southern pine 
lumber companies') for the years 1917 and 1918. In addition to unit figures 
enumerated above, the table also shows the percentage rate of earnings from all 
sources to total capital invested for all companies for which investment figures 
are available. 

Cost of sales is based on total cost of producing and selling lumber, divided 
by the footage sold, due consideration being given to all available inventories. 
For many companies the figures shown are only approximately correct, as 
inventory figures necessary for absolute accuracy were frequently omitted in 
the reports. The figures shown are, however, as accurate as they can be made 
from the information available. 

The realization per thousand is obtained by dividing the money value of 
lumber sold after deduction of returns, allowances, etc., by the total footages 
sold. The difference between this figure and cost of sales represents the profit 
(or loss) realized from lumber. 

Income from all sources includes earnings from outside investments, dividends 
on owned securities, rents from farm lands, houses, etc., as well as profit real- 
ized from lumber. 

The rates of earnings on investments shown in the table are computed on the 
basis of total capital invested, including capital used in the lumber business 
and outside investment, and the total earnings from all sources before 'deduc- 
tions are made for interest and income and excess-profits taxes paid. 

Complete data on total investment is available for but 157 of the 205 com- 
panies for 1917 and 144 for 1918. Consequently it is impossible to show the 
rate of earnings on investment for all companies. For those companies for 
which the rates of earnings are shown it is very noticeable that companies 
reporting comparatively low earnings per thousand from all sources frequently 
had much higher rates of earnings on total investment than companies having 
much higher earnings per thousand. Aside from variations in total earnings 
due to volume of production, this showing only emphasizes the fact that the 
total capital investment varies widely for different companies. This varia- 
tion lies mainly in the amounts of capital invested in timber supply and plant 
and equipment and, to a lesser degree, to varying amounts of capital in out- 
side investments. Some companies own relatively large and others relatively 
small quantities of standing timber. Some acquired their timber long ago at 
low figures and others more recently at comparatively high figures ; and finally 
the quality of stumpage owned also affects its value and thereby the amount 
of tiniber investment for different companies. 

Of the 205 companies 16, or about 8 per cent, in 1917, and 39, or 19 per cent 
of the total, in 1918, showed losses on their lumber operations. In both years 
income from other sources for some of the companies showing losses was 
greater than the losses incurred on lumber, so that they showed some profit 
from all sources before the payment of interest. On the other hand, losses 
from outside investments only added to the losses from lumber for some 
companies, while for others profits from lumber were reduced or even turned 
into losses after the deduction of losses from outside investments. In 1917 
the greatest loss per thousand feet of lumber sold amounted to $4.35, and the 
largest profit amounted to $9.80. In 1918 the greatest loss was $4.85 and the 
highest profit $13.79 per thousand feet of lumber sold. 

Finally, after profits or losses from other sources are taken into consideration, 
10 companies, or nearly 5 per cent of the 205 companies in 1917, and 30, or 
14.6 per cent of the total number in 1918, showed losses before the payment 
of interest. In 1917 the largest loss from all sources per thousand feet of 
lumber sold was $4.35, and the largest profit was $16.57. In 1918 the largest 
loss was $4.85, and the largest profit $18.16 per thousand feet. 



84 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Table 42. — Cost of sales, sales realization, profit on lumber, and profit from all- 
sources per thousand feet as reported by 205 southern pine lumber companies, 
arranged from loiv to high on basis of profit on lumber, and rates of return on 
investment for 156 companies for 1917, 



Company number. 1 


Size 
group 
of com- 
pany.2 


Cost of 
sales. 


Sales 
realiza- 
tion. 


Profit on 
lumber. 


Total 

profit 

from all 

sources. 


Rates of 
return on 
total in- 
vestment. 


1 


B 
B 
C 
D 
B 
B 
B 
B 
C 
B 
B 
B 
A 
D 
B 
D 
B 
B 
A 
C 
B 
B 
C 
A 
B 
A 
B 
B 
B 
C 
A 
B 
B 
C 
B 
A 
A 
B 
C 
B 
B 
B 
A 
A 
B 
C 
C 
C 
A 
B 
A 
B 
B 
B 
D 
B 
B 
A 
D 
A 
B 
B 
C 
B 
A 
B 
B 
C 
A 
E 


$22. 40 
23.45 
20.87 
21.76 
17.51 
21.62 
16.67 
17.82 
18.39 
20.91 
19.80 
20. 58 
20.94 
21.15 
18.48 
19.02 
21.56 
16.66 
16.44 
17.72 
20.38 
18.18 
18.01 
20.00 
20.58 
20.42 
19.75 
18.91 
17. 55 
21.72 
14.15 
18.97 
14.28 
16.48 
18.37 
18.97 
14.90 
20.58 
16.35 
16.96 
19.66 
15.24 
23.03 
18.22 
19.05 
20.04 
17.50 
17. 84 
17.84 
15.97 
18.86 
16.87 
19.60 
18.58 
19.07 
19.62 
19.67 
14.15 
16.58 
16.60 
18.79 
17. 39 
18.50 
17.81 
16.26 
17.12 
16.29 
18.94 
15.71 
17.98 


$18. 05 
20.73 
18.96 
20.55 
16.49 
20.68 
15.74 
17.23 
18.09 
20.67 
19.63 
20.41 
20.80 
21.06 
18.42 
19.01 
21.56 
16.78 
16.87 
18.27 
20.95 
18.80 
18.67 
20.67 
21.29 
21.18 
20. 53 
19.75 
18.39 
22.57 
15.10 
19.94 
15.31 
17.51 
19.43 
20.13 
16.11 
21.79 
17.62 
18.26 
20.98 
16.60 
24.51 
19.70 
20.55 
21.60 
19.15 
19.50 
19.57 
17.70 
20.60 
18.62 
21.36 
20.34 
20.83 
21.41 
21.47 
16.00 
18.43 
18.46 
20. 68 
19.30 
20.42 
19.75 
18.24 
19.14 
18.32 
20. 98 
17.81 
20.13 


s $4. 35 
3 2.72 

3 1.91 
3 1.21 

3 1.02 
3.94 
3.93 
3.59 
3.30 
s.24 

8.17 

s.17 

3.14 

3.09 
3.06 

3.01 


3 $4. 35 

3 1.21 

.08 

3 1.14 

- 3.90 
3.55 
3.63 
1.76 
3.07 
1.37 
.87 

3.61 

.20 
.72 
.03 

.38 




2 


3 2 2 


3.. 




4 


3 1 1 


5 


3 2.9 


6 




7 




8 


5 7 


9 


i l 


10. . 


2 5 


lit 


4 3 


12. . 


3 15 


13 


1.9 


14. 


1 4 


15. 


1 


16.. 


.6 


17 






.12 

.43 

.55 

.56 

.62 

.66 

.67 

.71 

.76 

.78 

,84 

.84 

.85 

.95 

.97 

1.03 

1.03 

1.06 

1.16 

1.21 

1.21 

1.27 

1.30 

1.32 

1.36 

1.48 

1.48 

1.50 

1.56 

1.65 

1.66 

1.73 

1.73 

1.74 

1.75 

1.76 

1.76 

1.76 

1.79 

1.80 

1.85 

1.85 

1.86 

1.89 

1.91 

1.92 

1.94 

1.98 

2.02 

2.03 

2.04 

2.10 

2.15 


.12 
1.50 

.75 
1.40 
3.69 

.66 

.67 
1.58 
2.62 

.72 
1.86 
1.47 

.85 

.95 
1.10 

.92 
1.55 
2.34 
1.57 
2.98 
1.66 
1.73 
2.17 
1.32 
5.10 
2.49 
3 .64 
1.54 
2.21 
4.40 
1.49 
1.92 
1.44 
1.74 
2.27 
2.01 
2.28 
1.17 
3.08 

.84 
1.85 
2,55 
1.93 
1.89 
2.07 
2.21 
2.21 
1.98 
2.02 
2.94 
3.55 
2.10 
3.17 




19... 


3 1 


20 




21 


5.6 


22 


3 2.8 


23 


1.3 


24 




2", 


2.8 


20 


6.1 


27 


2.3 


28 


4.3 


29 


4.1 


30 




31 




32 


4.4 


33 




34 


6.6 


35 r 


9.0 


36 




37 


18.6 


38 


9.5 


39 




40 


5.8 


41 




42 


4.4 


43 


7.1 


44 




45 




46 


7.0 


47 


10.8 


48 


3.5 


49 


9.1 


50 


3.3 


51 


11.2 


52. . 




53 


15.2 


54 


5.9 


55 


1.2 


56 


5.7 


57. . . 




58... 




59 


4.8 


60 


10.6 


61 


9.9 


62 


12.5 


63. 




64 


22.6 


65 




66. 




67 


4.9 


68. . 


5.3 


69 


13.0 


70 


5.3 



1 One company ooerating four mills reported costs and income in detail for one mill only, but included 
net earnings from the other three mills as "earnings from other sources." 

2 The letters indicate roughly the quantity sold during the vear as follows: "A," 12,500,000 or less; " B," 
12,500,000 to 25,000,000; "C," 25,000,000 to 50,000,000; "D," 50,000,000 to 100,000,000, and "E," over 100,000,000 
feet B. M. 

3 Loss. 



APPENDIX. 85 

Table 42. — Cost of sales, soles realization, profits on lumber, etc. — Continued. 



Company number. 


Size 
group 
of com- 
pany. 


Cost of 
sales. 


Sales 
realiza- 
tion. 


Profit on 
lumber. 


Total 

profit 

from all 

sources. 


Rates of 
return on 
total in- 
vestment. 


71 


B 
B 
C 
A 
B 
C 
B 
A 
A 
C 
D 
A 
B 
C 
A 
B 
B 
A 
B 
A 
C 
B 
C 
B 
A 
A 
C 
D 
B 
B 
B 
C 
A 
E 
B 
C 
D 
B 
C 
C 
B 
A 
D 
B 
C 

c 
c 
c 
c 
c 
c 

A 
E 

c 

A 
A 
C 
B 
C 
C 
B 
C 
D 
C 
B 
B 
C 
E 
C 
A 
C 
B 
B 
B 
B 
B 
C 

c 


$16. 71 
18.46 
19.70 
20.57 
18.31 
16.35 
18.48 
15.31 
17.35 
22.11 
19.16 
16.36 
17.75 
16.84 
16.36 
15.84 
17.07 
13.20 
17.91 
21. 57 
16.27 
21.22 
15.38 
19.64 
15.34 
16.98 
17.08 
17.35 
18.21 
13.75 
14.38 
18.36 
15.79 
18.10 
15.73 
19.09 
18.97 
17.58 
18.62 
14.96 
14.10 
17.61 
18.18 
19.27 
17.39 
15.46 
13.01 
16.69 
17.59 
15.58 
16.11 
17.15 
17.57 
15.31 
18.64 
16.50 
15.45 
17.32 
20.02 
17.68 
15.12 
19.08 
16.75 
14.10 
15.84 
13.64 
17.13 
16.08 
17.20 
14.94 
18.18 
15.20 
15.60 
16.15 
15. 91 
16.63 
18.48 
15.66 


$18. 87 
20.68 
21.92 
22.81 
20.63 
18.72 
20.87 
17.77 
19.83 
24.60 
21.65 
18.90 
20.30 
19.39 
18.96 
18.53 
19.86 
16.01 
20.73 
24.43 
19.22 
24.18 
18.35 
22.63 
18.37 
20.02 
20.14 
20.48 
21.37 
16.92 
17.57 
21.55 
19.06 
21.41 
19.17 
22.54 
22.44 
21.19 
22.24 
18.60 
17.82 
21.34 
21.91 
23.07 
21.19 
19.27 
16.93 
20.62 
21.54 
19.54 
20.08 
21.16 
21.60 
19.38 
22.85 
20.78 
19.73 
21.64 
24. 35 
22.04 
19.49 
23.46 
21.14 
18.51 
20.29 
18.09 
21.58 
20.53 
21.66 
19.49 
22.78 
19.84 
20.27 
20.86 
20.70 
21.50 
23.40 
20.61 


$2.16 
2.22 
2.22 
2.24 
2.32 
2.37 
2.39 
2.46 
2.48 
2.49 
2.49 
2.54 
2.55 
2.55 
2.60 
2.69 
2.79 
2.81 
2.82 
2.86 
2.95 
2.96 
2.97 
2.99 
3.03 
3.04 
3.06 
3.13 
3.16 
3.17 
3.19 
3.19 
3.27 
3.31 
3.44 
3.45 
3.47 
3.61 
3.62 
3.64 
3.72 
3.73 
3.73 
3.80 
3.80 
3.81 
3.92 
3.93 
3.95 
3.96 
3.97 
4.01 
4.03 
4.07 
4.21 
4.28 
4.28 
4.32 
4.33 
4.36 
4.37 
4.38 
4.39 
4.41 
4.45 
4.45 
4.45 
4.45 
4.46 
4. 55 
4.60 
4.64 
4.67 
4.71 
4.79 
4.87 
4.92 
4.95 


$2.32 
2.93 
1.87 
2.82 
3.46 
2.98 
4.47 
2.46 
2.25 
2.49 
3.05 
2.54 
3.35 

16.57 
2.37 
3.53 
3.94 
2.81 
3.09 
4.05 
3.34 
3.42 
3.18 
2.65 
4.41 
4.06 
3.06 
4.09 
4.32 
3.34 
6.05 
2.70 
3.27 
3.15 
3.44 
3.75 
4.89 
3.61 
4.09 
4.10 
3.72 
3.73 
6.13 
4.35 
5.68 
4.91 
4.66 
4.81 
4.08 
4.77 
4.83 
3.70 
4.77 
4.18 
4.21 
4.28 
7.26 
4.01 
4.26 
7.83 
4.27 
5.39 
5.43 
4.86 
4.23 
5.47 
4.76 
5.46 
5.10 
4.71 
4.89 
5.22 
4.67 
6.67 
6.51 
4.63 
5.77 
4.95 


7.5 


72 


10.7 


73 


3.4 


74 




75 

76 


6.5 

8.7 


77 




78 


14.4 


79 


7.2 


80 


9.4 


81 


6.5 


82 




S3 


4.8 


84 


7.6 


85 


15.3 


86 


21.5 


87 


16.1 


88 




89 


7.3 


90 


28.6 


91 


7.1 


92...... 




93 


10.5 


94 .- 




95 




96 


7.0 


97 




98 




99 


17.0 


100 


14.1 


101 




102 


3.5 


103 




104 


3.2 


105 




106 


7.0 


107 .-. . 


6.1 


108 * 


6.1 


109 




110 


28.8 


Ill 


10.6 


112 


2.0 


113 


8.1 


114 


17.2 


115 


12.2 


116 

117 

118 

119 


5.1 

6.7 

10.9 

8.5 


120 


19.5 


121 




122 




123 


4.8 


124 


13.3 


125 v 




126 


f.6 


127 




128 


4.3 


129 


4.3 


130 


14.2 


131 


13.0 


132 


6.7 


133 


13.1 


134 




135 


41.8 


136 


18.1 


137 


12.8 


138 


18.1 


139 


19.8 


140 


10.6 


141 




142 


14.9 


143 




144 


9.7 


145 


10.2 


146 


17.4 


147 


16.3 


148 





86 COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 

Table 42. — Cost of sales, sales realization, profits on lumber, etc. — Continued. 



Company number. 


Size 
group 
of com- 
pany. 


Cost of 
sales. 


Sales 
realiza- 
tion. 


Profit on 
lumber. 


Total 

profit 

from all 

sources. 


Rates of 
return on 
total in- 
vestment. 


149 


C 
D 
C 
B 

C 

C 

c 

B 
E 
D 
B 
C 
C 
A 
D 
D 
B 
C 
B 
D 
D 
C 
C 
C 
B 
C 
B 
C 

c 
c 

D 
C 

E 
D 
A 
C 
D 
E 
C 

c 
c 

D 

c 

B 
D 
B 
A 
B 

c 

C 
E 
C 
D 
C 
C 
D 
C 


$16. 20 
15. 27 
16.91 
13.55 
15.02 
17.52 
15.67 
16.50 
14.12 
15.43 
20.19 
16.65 
15. 49 
14.24 
15.66 
15.67 
19.68 
17.01 
17.84 
16.27 
15.79 
15.73 
16.01 
16.02 
15.81 
14.93 
13.00 
16.07 
16.17 
15.30 
14.57 
15.60 
14.72 
13.11 
15.44 
14.40 
14.41 
14.93 
16.00 
14.22 
14.87 
14.02 
13.07 
17.13 
15.48 
13.72 
15.85 
13.18 
12.56 
12.32 
13.34 
13.16 
13.42 
13.20 
12.76 
12.81 
13.95 


$21. 20 
20.30 
21.95 
18.71 
20.24 
22.79 
21.01 
21.85 
19.53 
20.85 
25.67 
22.13 
21.07 
19.83 
21.28 
21.29 
25.33 
22.67 
23.75 
22.21 
21.75 
21.79 
22.07 
22.24 
22.08 
21.20 
19.29 
22.40 
22.60 
21.75 
21.03 
22.09 
21.28 
19.75 
22.09 
21.08 
21.10 
21.70 
23.00 
21.25 
21.96 
21.28 
20.45 
24.57 
23.04 
21.30 
23.68 
21.14 
20.58 
20.41 
21.72 
21.65 
22.03 
22.14 
21.91 
22.23 
23.75 


$5.00 
5.03 
5.04 
5.16 
5.22 
5.27 
5.34 
5.35 
5.41 
5.42 
5.48 
5.48 
5.58 
5.59 
5.62 
5.62 
5.65 
5.66 
5.91 
5.94 
5.96 
6.06 
6.06 
6.22 
6.27 
6.27 
6.29 
6.33 
6.43 
6.45 
6.46 
6.49 
6.56 
6.64 
6.65 
6.68 
6.69 
6.77 
7.00 
7.03 
7.09 
7.26 
7.38 
7.44 
7.56 
7.58 
7.83 
7.96 
8.02 
8.09 
8.38 
8.49 
8.61 
8.94 
9.15 
9.42 
9.80 


$5.68 
5.13 
5.19 
5.88 
5.30 
5.33 
6.25 
6.72 
6.05 
5.94 
7.12 
9.94 
5.97 
5.89 
8.04 
7.92 
4.31 
8.12 
5.91 
9.25 
6.19 
7.52 
6.13 
6.37 
6.90 
7.29 
6.29 
9.33 
7.69 
6.83 
6.88 
6.73 
8.06 
7.39 
8.58 
7.34 
7.58 
8.77 
9.38 
8.69 
9.11 
7.32 
7.73 
7.46 
9.65 
7.78 
7.83 
7.94 
8.99 
8.24 
8.86 
8.14 
9.59 
9.40 
9.59 

10.19 
9.64 


39.3 


150 


11.3 


151 




152 




153 


8.0 


154 


11.7 


155 


16.5 


156 


13.2 


157 


24.3 


158 


20.9 


159 


14.0 


160 


16.4 


161 


7.3 


162 




163 


13.9 


164 


27.1 


165 


6.5 


166 


9.8 


167 




168 


17.6 


169 


6.4 


170 


5.0 


171 


14.4 


172 


9.7 


173 


14.9 


174 


2.6 


175 




176 


31.8 


177 


20.1 


178 


20.8 


179 




180 


17.2 


181.... 


15.0 


182 


11.0 


183 


52.1 


184 


8.4 


185 


15.3 


186 


15.5 


187 


14.2 


188 


11.2 


189 


17.8 


190 


8.9 


191 


46.4 


192 


27.8 


193 


21.5 


194 


23.8 


195 


27.9 


196 


24.7 


197 


9.1 


198 


9.0 


199 


14.8 


200 


22.4 


201 


25.6 


202 


21.8 


203 


13.7 


204 


33.4 


205 


12.8 







APPENDIX. 



87 



Table 43. — Cost of sales, sales realization, profit on lumber, and profit from all 
sources per thousand feet as reported by 205 southern pine lumber companies, 
arranged from low to high on basis of profit on lumber, and rates of return 
on investment for 144 companies for 1918. 



Company number. 1 


Size 
group 
of com- 
pany. a 


Cost of 
sales. 


Sales 
realiza- 
tion. 


Profit on 
lumber. 


Total 

profit 

from all 

sources. 


Rates of 
return on 
total in- 
vestment. 


1 


A 
B 
A 
A 
B 
A 
A 
B 
B 
A 
A 
B 
D 
B 
D 
A 
A 
A 
A 
B 
B 
A 
B 
B 
B 
B 
A 
A 
B 
B 
C 
B 
A 
B 
A 
C 
D 
A 
B 
A 
A 
A 
B 
B 
C 
B 
B 
B 
A 
A 
C 
A 
A 
C 
B 
A 
B 
A 
B 
A 
B 
C 
C 
B 
B 
B 
E 
C 
G 


$26. 97 
31.23 
27.89 
25.82 
29.91 
27.37 
28.00 
27.06 
29. 03 
28.49 
28.46 
21.81 
2 : >. 60 
26.73 
29.72 
27.02 
24.74 
25.85 
23.89 
27.31 
21.66 
35.10 
29.24 
31.42 
21.95 
24.44 
37.12 
26.64 
23.05 
21.25 
27.29 
24.92 
25. 92 
25.11 
24.67 
22.97 
26.33 
26.14 
25.34 
22.96 
26.78 
24.61 
20.94 
24.51 
23.62 
26.00 
29.84 
25.04 
20.72 
26.56 
23.67 
23.76 
25. 61 
25. 81 
25.44 
24.32 
26.20 
27.50 
18.51 
26.35 
31.14 
24.93 
25.40 
24.03 
25.14 
24.49 
25.16 
20.67 
19.12 


$22. 12 
26.87 
23.65 
21.83 
25. 96 
23.52 
24.30 
23.48 
25.48 
25. 10 
25.32 
18.81 
23.10 
24.47 
27.59 
24.90 
22. 85 
24.01 
22.07 
25.58 
19.96 
33.42 
27.56 
29.84 
20.42 
23.07 
35. 94 
25.78 
22.19 
20.39 
26.48 
24.43 
25.46 
24.78 
24.44 
22.74 
26.16 
26.04 
25.33 
23.02 
26.87 
24.81 
21.18 
24.80 
23.96 
26.46 
30.39 
25.63 
21.34 
27.18 
24.30 
24.44 
26.30 
26.58 
26.36 
25.32 
27.20 
28.59 
19.61 
27.50 
32.33 
26.13 
26.67 
25.37 
26.48 
25.87 
26.56 
22.17 
20.72 


» $4. 85 
3 4.36 
3 4. 24 
3 3.99 
3 3.95 
8 3.85 
3 3.70 
3 3.58 
3 3.55 
3 3.39 
3 3.14 
3 3.00 
3 2. 50 
3 2.26 
3 2.13 
3 2.12 
3 1.89 
3 1.84 
3 1.82 
3 1.73 
3 1.70 
3 1.68 
3 1.68 
3 1.58 
3 1.53 
3 1.37 

3 1.18 

3.86 
3.86 
3.86 

3,81 

3.49 
3.46 
3.33 
s.23 
3 .23 

3.17 
8.10 
8.01 

.06 

.09 

.20 

.24 

.29 

.34 

.46 

.55 

.59 

.62 

.62 

.63 

.68 

.69 

.77 

.92 

1.00 

1.00 

1.09 

1.10 

1.15 

1.19 

1.20 

1.27 

1.34 

1.34 

1.38 

1.40 

1.50 

1.60 


3 $4. 85 
3 4.36 
3 2.54 
3 3.85 
3 2. 57 
3 3.85 
.39 

3.81 
3 2.56 
3 3.39 
3 3.14 
3 3.00 
3 1.92 
3 1.25 

3.80 
.74 

3.52 

3 1.84 

3 1. 52 

.44 

3.68 

3.71 

3 4. 18 
3.07 
3.88 

3 1.39 

3 1.18 

3.73 

3.59 

3.72 

3.74 

.75 

.13 

.16 

.40 

3.08 

3.39 

2.36 




2 




3 


3 2 6 


4 




5 


3 3 7 


6 


' c 11 9 


7 


1 


8 




9 




10 




11 


3 13 


12 




13 


3 2 8 


14 


3 3. 5 


15 




1G 


.6 


17 


3 1.8 


18 




19 




20 


.9 


21 


s 2.0 


22 




23 ■. . 


3 7.8 


24 


3 .1 


25 




26 


3 1.3 


27 




28 


3 7.7 


29 


3 1.6 


30 




31 


3 1.0 


32 


1.7 


33 




34 


.6 


35 




36 




37 


3 .3 


38 


5.4 


39 


3 .1 


40 


.87 

.09 

.60 

2.70 

3.65 

.43 

.98 

1.22 

1.97 

1.27 

2.25 

1.21 

5.20 

1.35 

.77 

.92 

1.46 

2.25 

4.16 

2.32 

1.55 

.42 

1.20 

2.91 

2.71 

.36 

2.76 

2.42 

5.88 

1.45 


2.9 


41 




42 


2.6 


43 


5.5 


44 


3 1.2 


45 


3.9 


46 




47 


4.5 


48 


2.1 


49 


5.5 


50.....* 


1.1 


51 


14.4 


52 > 


10.5 


53 


5.6 


54 


2.5 


55 




56 




57 


1.5 


58 




59 




60 




61 


.7 


62 




63 




64 


6.9 


65 


.8 


66 


7.9 


67 


3.3 


68 


5.5 


69 





1 One company operating four mills reported costs and income in detail for one mill only, but included 
net earnings from the other three mills as " earnings from other sources." 

J The letters indicate roughly the quantity sold during the year as follows: "A," 12,500,000 or less; "B/ ' 
12,500,000 to 25,000,000; "C," 25,000,000 to 50,000,000; "D," 50,000,000 to 100,000,000, and "E " over 100,000,000 
feet b. m. 

3 Loss. 



88 COSTS AND PROFITS OF SOUTHERN" PINE COMPANIES. 

Table 43. — Cost of sales, sales realization, profits on lumber, etc. — Continued. 



Company number. 


Size 
group 
of com- 
pany. 


Cost of 
sales. 


Sales 
realiza- 
tion. 


Profit on 
lumber. 


Total 

profit 

from all 

sources. 


Rates of 
return on 
total in- 
vestment. 


70 


B 
A 
A 
A 
B 
A 
A 
B 
B 
C 
C 
A 
B 
C 
A 
A 
C 
A 
A 
B 
A 
A 
C 
B 
B 
B 
B 
C 
B 
B 
D 
C 
B 
B 
D 
C 
B 
B 
B 
B 
B 
B 
C 
B 
A 
B 
C 
C 
A 
A 
C 
A 
D 
C 
C 
A 
D 
C 
C 
E 
C 
D 
B 
B 
C 
D 
C 
C 
A 
A 
A 
B 
C 
C 
A 
D 
A 
B 


$27. 46 
20.95 
21.45 
23.18 
22.29 
24.98 
18.63 
25.98 
24.57 
24.44 
21.49 
21.69 
24.54 
24.26 
25.08 
21.99 
22.68 
22.76 
25.47 
20.43 
22.63 
25.13 
24.72 
20.56 
31.82 
25.87 
23.51 
25.75 
24.24 
20.69 
23.90 
26.69 
26.11 
20.92 
25.75 
23.30 
19.86 
23.69 
19.35 
21.75 
23.22 
20.98 
23.26 
26.04 
32.58 
21.81 
30.59 
22.89 
19.77 
20.68 
22.32 
19.74 
23.61 
23.50 
19.13 
20.63 
23.06 
22.50 
20.95 
23.54 
25.71 
23.27 
23.42 
23.87 
21.19 
22.44 
23.62 
22.04 
20.37 
22.25 
20.26 
22.06 
21.85 
21.89 
25.39 
21.88 
31.30 
22.22 


$29. 10 
22.65 
23.24 
25.01 
24.14 
26.84 
20.54 
27.99 
26.60 
26.59 
23.64 
23.85 
26.75 
26.47 
27.31 
24.25 
24.96 
25.12 
27.87 
22.85 
25.38 
27.93 
27.57 
23.43 
34.70 
28.76 
26.53 
28.83 
27.38 
23.88 
27.09 
29.92 
29.36 
24.21 
29.04 
26.60 
23.18 
27.05 
22.80 
25.21 
26.75 
24.51 
26.83 
29.73 
36.28 
25.51 
34.29 
26.63 
23.52 
24.46 
26.12 
23.63 
27.55 
27.48 
23.15 
24.67 
27.17 
26.62 
25.07 
27.78 
30.00 
27.57 
27.76 
28.23 
25.56 
26.81 
28.05 
26.51 
24.95 
26.86 
24.91 
26.75 
26.54 
26.58 
30.14 
26.64 
36.08 
27.11 


$1.64 
1.70 
1.79 
1.83 
1.85 
1.86 
1.91 
2.01 
2.03 
2.15 
2.15 
2.16 
2.21 
2.21 
2.23 
2.26 
2.28 
2.36 
2.40 
2.42 
2.75 
2.80 
2.85 
2.87 
2.88 
2.89 
3.02 
3.08 
3.14 
3.19 
3.19 
3.23 
3.25 
3.29 
3.29 
3.30 
3.32 
3.36 
3.45 
3.46 
3.53 
3.53 
3.57 
3.69 
3.70 
3.70 
3.70 
3.74 
3.75 
3.78 
3.80 
3.89 
3.94 
3.98 
4.02 
4.04 
4.11 
4.12 
4.12 
4.24 
4.29 
4.30 
4.34 
4.36 
4.37 
4.37 
4.43 
4.47 
4.58 
4.61 
4.65 
4.69 
4.69 
4.69 
4.75 
4.76 
4.78 
4.89 


$1.94 
2.21 
2.02 
2.81 
.71 
2.40 
1.91 
4.05 
2.02 
2.51 
3.08 
1.83 
4.02 
3.62 
2.80 
2.93 
3.33 
2.36 
2.39 
3.02 
1.81 
3.82 
2.85 
3.03 
3.38 
2.92 
3.53 
6.43 
3.32 
3.19 
3.54 
3.23 
3.25 
4.02 
3.19 
4.53 
3.41 
3.86 
4.03 
3.81 
5.85 
4.08 
4.77 
4.04 
5.80 
3.86 
3.73 
3.86 
4.20 
3.90 

18.16 
4.00 
5.79 
2.87 
4.26 
6.04 
6.14 
4.38 
5.07 
7.43 
5.88 
6.02 
4.79 
7.82 
5.76 
7.44 
6.72 
4.63 
4.58 
5.73 
3.18 
5.88 
4.90 
6.45 
6.32 
6.11 
6.49 
9.65 


2 8 


71 


16 1 


72 




73 




74 


1 2 


75 -.'... 


7.1 


76 




77 


3 2 


78 , 


3.7 


79 




80 


6.6 


81 


3.9 


82 


8.0 


83 


10.5 


84 




85 




86 


9.5 


87 


13.9 


88 


6.4 


89 




90 




91 


8.9 


92 




93 




94 


6.7 


95 




96 


8.5 


97 


5.9 


98 


4.4 


99 




100 


3.4 


101 




102 


6.6 


103 


7.8 


104 


4.0 


105 


5.1 


106 




107 


16.3 


108 


11.5 


109 




110 




m 


4.1 


112 


6.8 


113 


4.6 


114 


9.9 


115 


9.7 


116 


5.9 


117 




118 


18.0 


119 


7.4 


120 


7.9 


121 


8.4 


122 




123 

124 


17.7 


125 


10.9 


126 

127 


13.2 
7.9 


128 

129 


7.1 
7.1 


130 


6.5 


131 i 


27.6 


132-. 


24.8 


133 

134 

135 


8.1 

2.2 

11.5 


136 


6.4 


137 


8.4 


138 




139 


12.2 


140 


26.9 


141 


12.1 


142 


15.3 


143 


11.6 


144 




145 


7.8 


146 




147 


8.1 



APPENDIX. 89 

Table 43. — Cost of sales, sales realization, profits mi lumber, etc. — Continued. 



Company number. 


Size 
group 
of com- 
pany. 


Cost of 
sales. 


Sales 
realiza- 
tion. 


Profit on 
lumber. 


Total 

profit 

from all 

sources. 


Rates of 
return on 
total in- 
vestment. 


148 


A 
B 
C 
B 
C 
B 
B 
E 
C 
D 
A 
C 
B 
C 
A 
B 
B 
D 
D 
A 
B 
E 
D 
C 
D 
C 
B 
B 
D 
D 
C 
C 
A 
D 
B 
D 
B 
D 
B 
B 
C 
D 
E 
B 
D 
C 
C 
C 
C 

c 
c 

B 
B 

c 

C 

E 
D 
C 


$19. 99 
21.79 
19.50 
29.45 
23.22 
17.82 
21.27 
21.71 
22.92 
21.02 
16.85 
20.52 
19.86 
18.68 
23.23 
18.08 
22.97 
17.94 
20.41 
23.56 
19.28 
19.97 
19.98 
22.62 
23.28 
21.69 
20. 14 
20.27 
19.44 
21.25 
20.32 
19.25 
20.35 
22.27 
17.31 
21.00 
22.49 
19. 50 
18.21 
20.41 
20.69 
18.28 
18.79 
18.29 
19.30 
18.83 
18.71 
18.50 
21.40 
15.81 
16.49 
17.50 
18.61 
18.00 
19.22 
17.13 
16.63 
15.63 


$25.08 
26.92 
24.63 
34.64 
28.50 
23.10 
26.61 
27.06 
28.28 
26.39 
22.26 
25.95 
25.30 
24.32 
28.97 
23.83 
28.73 
23.72 
26.20 
29.38 
25.17 
25.88 
25.93 
28.63 
29.30 
27.90 
26.48 
26.83 
26.09 
27.93 
27.11 
26.04 
27.23 

29 47 
24.67 
28.50 

30 04 
2714 
25.99 
28.26 
28.63 
26.59 
27.22 
26.76 
27.88 
27.68 
27.73 
27.59 
30.71 
25.27 
25.99 
27.01 
28.14 
27.84 
29.64 
28.15 
27.75 
29.42 


$5.09 
5.13 
5.13 
5.19 
5.27 
5.28 
5.34 
5.35 
5.36 
5.37 
5.41 
5.43 
5.44 
5.64 
5.74 
5.75 
5.76 
5.78 
5.79 
5.82 
5.89 
5.91 
5.95 
6.01 
6.02 
6.21 
6.34 
6.56 
6.65 
6.68 
6.79 
6.79 
6.88 
. 7.20 
7.36 
7.50 
7.55 
7.64 
7. 7 8 
7.85 
7.°4 
8.31 
8.42 

8 47 
8.58 
8.85 
9.02 

9 09 
9 31 
0.46 
9.50 
0.51 
9.53 
9.84 

10.42 
11.02 
11.12 
13.79 


$4.65 
5.06 
6.22 
6.49 
5.67 
6.22 
5.84 
3.64 
9.21 
5.31 
5.41 
6.97 
5.44 
6.03 
5.74 
5.75 . 
7.35 
6.09 
7.89 
2.32 
5.09 
7.06 
4.42 
3.06 
3.78 
7.12 
6.36 
6.56 
7.71 
7.88 
5.96 
7.49 
8.67 
8.52 
7.41 
9.19 
7.55 
7.63 
8.24 
8.45 
8.16 
9.05 
13.00 
9.21 
9.35 
10.91 
9.40 
9.55 
8.82 
10.07 
9.98 
11.12 
9.68 
10.47 
13.78 
11.88 
11.51 
13.93 




149 , 




150 




151 


12.9 


152 


6.9 


153 




154 


12.0 


155 


5.4 


156 


8.4 


157 




158 




159 


6.8 


160 




161 




162 




163 




164 


18.0 


165 , 


20.7 


166 


12.0 


167 


5.3 


168 


11.6 


169 


7.9 


170 


8.1 


171 


2.8 


172 


8.9 


173 


31.2 


174 




175 




176 


8.2 


177 


11.0 


178 


6.7 


179 


29.7 


180 


51.7 


181 


19.2 


182 


9.1 


183 


18.7 


184 


20.7 


185 


9.3 


186 


20.9 


187 


18.5 


188 


6.9 


189 


17.2 


190 


23.9 


191 


23.3 


192 


13.2 


193 


15.8 


194 


30.5 


195 


31.6 


196 


8.0 


197 


10.6 


198 


10.9 


199 


18.8 


200 


14.8 


201 


25.0 


202 - 


16.0 


203 


20.0 


204 


21.0 


205 


27.2 







Exhibit 9. 

AVERAGE COST OF SALES, SALES REALIZATION, AND EARNINGS 
OF 143 SOUTHERN PINE LUMBER COMPANIES, 1917 AND 1918. 

The average cost of sales, sales realization, and profits of the 143 companies 
whose unit costs and profits are shown in Chapter IV, and whose investments 
and earnings are discussed in Chapter III, are shown in Table 44. The reported 
figures shown are computed as described for those of the 205 companies which 
are shown in Exhibit 5, Table 39, while the revised figures take account of the 
adjustments to eliminate appreciation of stumpage. 



90 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Table 44. — Average cost of sales, sales realization, and earnings from lumber 
and other sources as reported by 143 southern pine lumber companies, and as 
revised by the Commission, 1917 and 1918. 



Group and item. 



1917 



Reported. 



Amount. 



Per M 

feet 

B. M. 



Revised. 



Amount. 



PerM 

feet 

B. M. 



Gulf States group (116 companies selling 
4,693,893,012 feet B.M.): 

Sales realization 

Cost of sales 

Earnings from lumber 

Earnings from other sources 

Total earnings 

Deductions from earnings 

Net earnings after deductions 

Georgia- Florida group (13 companies selling 
258,577,845 feet B. M.): 

Sales realization 

Cost of sales 

Earnings from lumber 

Earnings from other sources 

Total earnings 

Deductions from earnings 

Net earnings after deductions 

Virginia-Carolina group (14 companies selling 
383,008,800 feet B. M.): 

Sales realization 

Cost of sales 

Earnings from lumber 

Earnings from other sources 

Total earnings 

Deductions from earnings 

Net earnings after deductions 

All groups (143 companies selling 5,335,479,657 
feet B. M.): 

Sales realization 

Cost of sales 

Earnings from lumber 

Earnings from other sources 

Total earnings 

Deductions from earnings 

Net earnings after deductions 



898, 859, 274. 18 
77, 028, 893. 38 
21, 830, 380. 80 

4, 530, 156. 50 
26, 360, 537. 30 

4, 867, 199. 48 
21, 493, 337. 82 



5, 221, 442. 70 
4, 375, 883. 24 
845, 559. 46 
219, 310. 49 
1, 064, 869. 95 
270,308.68 
794, 561. 27 



7,616,707.26 
7,356,098.48 
260, 608. 78 
205, 032. 28 
465,641.06 
158,121.22 
307, 519. 84 



111, 697, 424. 14 
88, 760, 875. 10 
22, 936, 549. 04 
4, 954, 499. 27 
27, 891, 048. 31 
5, 295, 629. 38 
22, 595, 418 93 



121. 06 
16.41 
4.65 
.97 
5.62 
1.04 
4.58 



20.19 
16.92 
3.27 
.85 
4.12 
1.05 
3.07 



19.89 
19.21 
.68 
.53 
1.21 
.41 
.80 



20.93 

16.63 

4.30 

.93 

5.23 

.99 

4.24 



B98, 859, 274. 18 
72, 744, 964. 97 
26, 114, 309. 21 

4, 530, 156. 50 
30, 644, 465. 71 

4,867,199.48 
25, 777, 266. 23 



5, 221, 442. 70 
4, 248, 511. 84 
972, 930. 86 
219, 310. 49 
1,192,241.35 
270, 308. 68 
921, 932. 67 



7,616,707.26 
7, 356, 098. 48 
260, 608. 78 
205, 032. 28 
465, 641. 06 
158, 121. 22 
307, 519. 84 



111, 697, 424. 14 
84,349,575.29 
27,347,848.85 

4, 954, 499. 27 
32,302,348.12 

5, 295, 629. 38 
27,006,718.74 



$21. 06 
15.50 
5.56 
.97 
6.53 
1.04 
5.49 



20.19 
16.43 
3.76 
.85 
4.61 
1.05 
3.56 



19.89 
19.21 
.68 
.53 
1.21 
.41 
.80 



20.93 

15.81 

5.12 

.93 

6.05 

.99 

5.06 



Group and item. 



1918 



Reported. 



Amount. 



PerM 

feet 

B. M. 



Revised. 



Amount. 



PerM 

feet 

B. M. 



Gulf States group (116 companies selling 
4,228,555,477 feet B. M.): 

Sales realization 

Cost of sales 

Earnings from lumber 

Earnings from other sources 

Total earnings 

Deductions from earnings 

Net earnings after deductions 

Georgia-Florida group (13 companies selling 
253,334,700 feet B. M.): 

Sales realization 

Cost of sales 

Earnings from lumber 

Earnings from other sources 

Total earnings 

Deductions from earnings 

Net earnings after deductions 



$113,188,877.70 
92,337,031.61 
20, 851, 846. 09 

4, 651, 151. 16 
25, 502, 997. 25 

6, 353, 840. 80 
19, 149, 156. 45 



6, 574, 963. 74 
5, 685, 729. 52 
8S9, 234. 22 
175, 187. 47 
1,064,421.69 
355, 053. 69 
709, 368. 00 



$26. 79 
21.86 
4.93 
1.10 
6.03 
1.50 
4.53 



25.95 

22.44 

3.51 



$113,188,877.70 
88, 126, 624. 88 
25,062,252.82 
4, 651, 151. 16 
29, 713, 403. 98 
6, 353, 840. 80 
23, 359, 563. 18 



6, 574, 963. 74 
5, 576, 899. 43 
998, 064. 31 
175, 187. 47 
1, 173. 251. 78 
355; 053. 69 
818, 198. 09 



$26.79 
20.86 
5.93 
1.10 
7.03 
1.50 
5.53 



25.95 
22.01 
3.94 
.69 
4.63 
1.40 
3.23 



APPENDIX. 



91 



Table 44. — Average cost of sales, sales realization, and earnings, etc. — Contd. 





1918 


Group and item. 


Reported. 


Revised. 




Amount. 


PerM 

feet 
B. M. 


Amount. 


PerM 

feet 
B. M. 


Virginia-Carolina group (14 companies selling 
282,187,138 feet B. M.): 
Sales realization 


$8, 381, 139. 03 
7, 898, 393. 12 
482, 745. 91 
81, 075. 39 
563,821.30 
248, 237. 68 
315, 583. 62 

128, 144, 980. 47 

105, 921, 154. 25 

22,223,826.22 

4,907,414.02 

27, 131, 240. 24 

6,957,132.17 

20, 174, 108. 07 


$29. 70 

27.99 

1.71 

.29 

2.00 

.88 

1.12 

26.92 
22.25 
4.67 
1.03 
5.70 
1.46 
4.24 


$8,381,139.03 
7, 898, 393. 12 
482, 745. 91 
81,075.39 
563,821.30 
248, 237. 68 
315, 583. 62 

128, 144, 980. 47 

101,601,917.43 

26, 543, 063. 04 

4,907,414.02 

31, 450, 477. 06 

6, 957, 132. 17 

24,493,344.89 


$29. 70 


Cost of sales 


27.99 


Earnings from lumber 


1.71 


Earnings from other sources 


.29 


Total earnings 


2.00 


Deductions from earnings 


.88 


Net earnings after deductions 


1.12 


All groups (143 companies selling 4,764,077,315 
feet B. M.): 
Sales realization 


26.92 


Cost of sales 


21.34 


Earnings from lumber 


5.58 


Earnings from other sources 


1,06 


Total earnings 


6.61 


Deductions from earnings 


1.46 


Net earnings after deductions 


5.15 







Exhibit 10. 



COSTS, BY OPERATIONS, AS REPORTED BY 143 SOUTHERN PINE 
LUMBER COMPANIES, 1917 AND 1918. 

Table 45 shows the total and unit costs to produce and sell as reported by 
143 southern pine lumber companies. The costs shown in this table are com- 
puted as described in Exhibit 5. As the 143 companies are included in the 205 
for which costs are shown in Exhibit 5, the differences occurring between the 
two tables are due merely to the use of a smaller number of companies in each 
of the territorial groups. 



Table 45. — Costs, 



by operations, as reported by lift southern pine lumber 
companies, 1917 and 1918. 





1917 


1918 


Item. 


Footage B. M. 


Total cost. 


Cost 
perM. 


Footage B.M. 


Total cost. 


Cost 
perM 


Gulf States group (116 
companies): 
Stumpage 


4,562,541,842 
4,563,095,758 
4,587,277,499 

4,587,277,499 
4,693,893,012 
4,693,893,012 
4,587,277,499 


$21,269,891.02 
19,879,299.98 
20,396,427.51 

10,616,509.38 
2,317,919.85 
2,778,788.20 
i 431, 103. 90 


$4.66 
4.35 
4.45 

2.31 
.49 
.59 

1.09 


3,909,785,173 
3,914,194,859 
3,908,276,384 

3,908,276,384 
4,228,555,477 
4,228,555,477 
3,908,276,384 


$19, 853, 389. 45 
25, 154, 570. 80 
26,373,724.88 

12,196,669.80 
2,979,887.48 
3,105,909.31 
1326,194.99 


$5.08 


Logging 


6.43 


Manufacturing 

General and admin- 
istrative 


6.75 

3.12 


Shipping 


.71 


Selling 


.74 


By-products 


1.08 






Net cost to produce 
and sell 




76,827,732.04 


16.76 




89,337,956.73 


22.75 










Georgia- Florida group (13 
companies): 
Stumpage 


275,052,679 
275,078,200 
268,179,916 

268,179,916 
258,577,845 
258, 577, 845 
268,179,916 


948,264.02 
1,545,095.09 
1,424,180.35 

459, 342. 90 

79, 565. 30 

148,034.49 

i 91, 545. 06 


3.45 
5.62 
5.31 

1.71 
.30 
.57 

1.34 


251, 304, 492 
250, 763, 385 
248,749,519 

248,749,519 
253,334,700 
253,334,700 
248,749,519 


953, 581. 50 
2,009,838.41 
1,846,632.20 

609,665.67 

128,047.34 

157,238.04 

1 109, 816. 36 


3.79 


Dogging 


8.01 


Manufacturing 

General and admin- 
istrative 


7.42 
2.45 


Shipping 


.51 


Selling 


.62 


By-products 


1.44 






Net cost to produce 
and sell 




4,512,937.09 


16.62 




5,595,186.80 


22.36 











i Deduct. 



92 



COSTS AND PROFITS OP SOUTHERN PINE COMPANIES. 



Table 45. — Cost, by operations, as required by 1J>3 southern pine lumber com- 
panies, 1911 and 1918 — Continued. 



Item. 



1917 



Footage B.M. 



Total cost. 



Cost 
perM 



1918 



Footage B.M. 



Total cost. 



Cost 
per M. 



Virginia-Carolina group 
(14 companies): 

Stumpage 

Logging 

Manufacturing 

General and admin- 
istrative : 

Shipping 

Selling 

By-products 



373,014,089 
370,350,971 
370, 350, 971 

370, 350, 971 
383, 008, 800 
383, 008, 800 
370,350,971 



$1,209,443.72 
2,435,995.39 
2,415,774.34 

1,024,421.50 

83, 054. 19 

233, 121. 99 

154,968.98 



$3.24 
6.58 
6.52 

2.77 
.22 
.61 

1.15 



268,549,336 
267,556,432 
267,556,432 

267,556,432 
282, 187, 138 
282, 187, 138 
267,556,432 



$948, 830. 01 
2,718,755.75 
2,623,238.68 

1,160,932.05 

96,188.30 

207,861.91 

171,049.34 



$3.53 

10.16 

9.80 

4.34 
.34 
.74 

1.27 



Net cost to produce 
and sell 



7,346,842.15 



19.79 



7,684,757.36 



28.64 



i 11 groups (143 companies) 

Stumpage 

Logging 

Manufacturing 

General and admin- 
istrative 

Shipping 

Selling 

By-products 



5,210,608,610 
5,208,524,929 
5, 225, 808, 386 

5,225,808,386 
5,335,479,657 
5,335,479,657 
5,225,808,386 



23, 427, 598. 76 
23,860,390.46 
24,236,382.20 

12,100,273.78 
2,480,539.34 
3,159,914.68 
1577,617.94 



4.50 
4.58 
4.64 

2.32 
.47 
.59 

i.ll 



4,429,639,001 
4,432,514,676 
4,424,582,335 

4, 424, 582, 335 
4,764,077,315 
4,764,077,315 
4,424,582,335 



21,755,800.96 
29, 883, 164. 96 
30,843,595.76 

13,967,267.52 
3,204,123.12 
3.471,009.26 
1507,060.69 



4.91 
6.74 
6.97 

3.16 
.67 
.73 

i.ll 



Net cost to produce 
and sell 



1, 687, 511. 28 



16.99 



102,617,900.89 



23.07 



1 Deduct. 

Exhibit 11. 

COSTS AND EARNINGS PER THOUSAND FEET AS REPORTED BY 
143 SOUTHERN PINE LUMBER COMPANIES, BY TERRITORIAL 
GROUPS AND QUANTITY SOLD, 1917 AND 1918. 

Table 46 shows the costs as reported by the 143 companies grouped accord- 
ing to territorial location of the companies and the quantities sold. These costs 
as reported may be compared with the costs for the same companies as revised 
by the Commission and shown in Table 31, p. 59, the only difference between 
the costs shown in the two tables being the revision made for appreciation in 
the stumpage costs as reported by 57 companies as shown in Table 29, 
p. 57. 

Table 46. — Costs and earnings per thousand feet as reported by 143 southern 
pine lumber companies, by territorial groups and quantity sold, 1917 and 
1918. 





1917 


1918 


Number of board feet. 


Number 
of com- 
panies. 


Per cent 
of sales 
footage. 


Cost of 
sales. 


Earnings 

on 
lumber. 


Number 
of com- 
panies. 


Per cent 
of sales 
footage. 


Cost of 
sales. 


Earnings 

on 
lumber. 


Gulf States group: 

12,500,000 and under 

12,500,000 to 25,000,000. . . . 
25,000,000 to 50,000,000. . . . 
50,000,000 to 100,000,000. . . 
Over 100,000,000 


10 
36 
45 
17 
8 


1.9 
12.6 
29.8 
21.0 
22.7 


$16. 86 
17.54 
16. 34 
15. 93 
16.28 


$3.66 
2.91 
5.04 
5.30 
4.59 


17 
42 
34 
17 
6 


3.2 
16.1 
26.2 
24.6 
18.7 


$23. 57 
23. 24 
21.43 
21.22 
21.73 


$1.09 
3.14 
5.49 
5.68 
5.35 






Total 


116 


88.0 


16.41 


4.65 


116 


88.8 


21.84 


4.93 


























. 





APPENDIX. 



93 



Table 46. — Costs and earnings per thousand feet as reported by 143 southern 
pine lumber companies, etc. — Continued. 





1917 


1918 


Number of board feet. 


Number 
of com- 
panies. 


Per cent 
of sales 
footage. 


Cost of 
sales. 


Earnings 

on 
lumber. 


Number 
of com- 
panies. 


Per cent 
of sales 
footage. 


Cost of 
sales. 


Earnings 

on 
lumber. 


Georgia- Florida group: 

12,500,000 and under 

12,500,000 to 25,000,000. . . . 
25,000,000 to 50,000,000. . . . 
50,000,000 to 100,000,000. . . 


4 
6 
3 


.6 
1.9 
2.3 


$18. 00 
16.91 
16.63 


$1.51 
2.04 
4.77 


5 
4 
3 
1 


.9 
1.3 
2.0 
1.1 


$22.51 
22.43 
24.07 
19.29 


$2.70 
2.50 
1.90 

8.58 


Over 100,000,000 






























Total 


13 


4.8 


16.92 


3.27 


13 


5.3 


22.44 


3 51 






Virginia-Carolina group: 
12,500,000 and und^r 
12,500,000 to 25,000,000. . . . 
25,000,000 to 50,000,000. . . . 
50,000,000 to 100,000,000. . . 
Over 100,000,000 


4 
5 
2 
3 


.5 
1.6 
1.1 
4.0 


17.63 
19.40 
14.06 
20.67 


1.74 

1.48 

3.50 

15.15 


6 
5 
1 
2 


.8 
1.6 

.9 
2.6 


27.67 
29.82 
30.59 
26.04 


1.71 

.78 

3.70 

1.57 




















Total 


14 


7.2 


19.21 


.68 


14 


5.9 


27.99 


1.71 






All groups: 

12,500,000 and under 
12,500,000 to 25,000,000. . . . 

25,000,000 to 50,000,000 

50,000,000 to 100,000,000. . . 
Over 100,000,000 


18 
47 
50 
20 

8 


3.0 

16.1 
33.2 
25.0 

22.7 


17.22 
17.65 
16.29 
16.69 
16. ?8 


2.91 
2.66 
4.97 
4.37 
4.59 


28 
51 
38 
20 
6 


5.0 
19.0 
29.1 
28.2 
18.7 


24.07 
23.73 
21.90 
21.59 
21.73 


1.49 
2.90 
5.18 
5.41 
5.35 






Total 


143 


100.0 


16.64 


4.30 


143 


100.0 


22.24 


4.66 







^ots. 



Exhibit 12. 



WHOLESALE PRICES OF LUMBER BY MONTHS, JANUARY, 1917, 
TO DECEMBER, 1921, INCLUSIVE. 

This exhibit shows the wholesale prices for southern pine lumber per thou- 
sand feet board measure, by months, from January, 1917, to December, 1921, 
inclusive. All prices shown are simple averages of weekly price quotations pub- 
lished in the American Lumberman. The prices shown are generally based on 
quotations for the Hattiesburg, Miss., lumber exchange, but when Hattiesburg 
quotations were unobtainable, Alexandria, La., Kansas City, Mo., or Birming- 
ham, Ala., quotations have been used, preference being given to quotations for 
the last three markets in the order named. 

These prices are the bases for the price discussion and Chart 4 to be found in 
Chapter V of the report. 



Table 47. — Simple average monthly lumber prices per thousand feet, f. o. b. 
mill, for specified grades and sizes, January, 1917, to December, 1921. 

[Compiled from American Lumberman.] 



Month and year. 



1917. 

January 

February 

March 

April 

May 

June 

July 

AUgUSt 

September 

October 

November 

December 

105332°— 22 8 



Flooring, 
1x3" EGA 



$37.00 
37.00 
38.00 
40.50 
44.75 
47.85 
47.63 
47.25 
47.40 
47.38 
47.37 
49.00 



Boards, 

SlSorS2S, 

No. 1, lx 

8", 14' 

and 16'. 



$18. 88 
18.56 
18.69 
19.87 
24.25 
25.63 
25.63 
25.25 
26.80 
26.00 
24.81 
28.47 



Fencing, 
SIS No. 2, 
1x4", all 

lengths. 



$13. 50 
12.75 
12.69 
14.44 
19.25 
21.13 
20.00 
19.50 
18.75 
18.12 
17.75 
19.88 



Dimension, 
S1S1E, 

No. 1, 2 x 
4", 10'. 



$22. 75 
21.88 



20.70 



Timbers. 
No. 1, Sq.E 
and S, S4S, 

8" 20' and 
under. 



$23. 25 
22.63 
21.00 
21.69 



94 



COSTS AND PROFITS OF SOUTHERN PINE COMPANIES. 



Table 47. — Simple average monthly lumber prices per thousand feet, f. o. b. mill, 
for specified grades and sizes, January, 1917, to December, 1921 — Con. 



Month and year. 



Flooring 
1x3" EGA 



Boards 

SIS or S2S, 

No. 1, 1 x 

8", 14' 

and 16'. 



Fencing, 

SIS No. 2, 

1x4", all 

lengths. 



Dimension, 
S1S1E, 

No. 1, 2 x 
4", 10'. 



Timbers, 
No. 1, Sq. E 
and S, S4S, 

""' 20' and 
under. 



Tanuary. . . 
February. . 

March 

April 

May 

June 

July 

August 

September. 
October. . . 
November. 
December . 



January. . 
February. 

March 

April 

May. 



June 

July 

August 

September. 

October 

November. 
December. 



January.. 
February. 

March 

April 

May. 



June 

July 

August 

September. 
October. . . 
November. 
Decembei . 



January... 
February. . 

March 

April 

May 

June 

July 

August 

September. 
October... 
November. 
December. 



1918. 



1919. 



1920. 



1921. 



$49. 75 
49.67 
49.31 
49.75 
51.05 
51.06 
50.25 
48.50 
48.00 
49.00 
49.13 
48.00 



50.56 
50.00 
49.75 
50.90 
52.44 
53.00 
66.10 
81.31 
89.88 
95.50 
97.19 
99.88 



110.00 
127. 17 
143.39 
143.81 
145.20 
128.13 
119. 98 
125.44 
126. 51 
119.00 
109. 25 
104.50 



85.63 
75.00 
71.67 
72.00 
70.42 
70.76 
70.69 
69.75 
72.22 
73.98 
75.34 
77.71 



$26. 35 
29.33 
28.75 
29.90 
29.15 
31.50 
31.13 
30.94 
29.13 
29.81 
30.13 
30.41 



30.87 
33.00 
32.25 
32.00 
33.42 
36.17 
40.75 
46.17 
48.00 
55.75 
51.31 
64.75 



62.00 
85.16 
89.05 
73.68 
63.92 
54.93 
50.93 
52-88 
47 90 
44.62 
37.45 
32.66 



29.38 
26.93 
25.05 
25.40 
23.33 
22.47 
25.15 
21.56 
22.54 
24.84 
28.63 
25.68 



$20.09 
21.67 
22.50 
23.25 
25.03 
25.94 
24.88 
24.00 
23.75 
24.56 
24.50 
24.17 



23.83 
25.08 
26.12 
25.65 
25.31 
26.88 
30.50 
33.25 
34.50 
35.56 
33.06 
35.33 



38.85 
44.34 
42.68 
4% 79 
39.53 
33.73 

an. 27 

32.02 
30.31 
24.61 
20.88 
18.70 



16.50 
15.44 
14.56 
13.55 
13.75 
15.19 
14.81 
14.81 
13.24 
14.97 
16.54 
15.16 



$22.00 
22.07 
23.13 
24.50 
24.90 
26.44 
26.15 
24.19 
25.75 
26.00 
25.13 
25.69 



25.80 
26.50 
26.88 
27.05 
26.94 
27.75 
33.46 
37.58 
40.30 
38.63 
39.32 
38.81 



42.90 
45.94 
50.85 
46.55 
43.69 
40.15 
34.67 
34.83 
35.88 
30.85 
23.88 
22.30 



20.50 
20.00 
20.75 
19.90 
20.81 
22.79 
21.20 
19.94 
20.48 
20.93 
23.18 
21.82 



$22. 70 



24.76 
25.42 
27.38 
27.40 
27.19 
26.00 
28.19 
27.45 
27.30 



27.55 
26.92 
26.63 
25.45 
26.31 
27.92 
29.55 
34.00 
36.10 
36.94 
35.99 
35.69 



38.93 
43.94 
46.80 
46.63 
43.91 
42.85 
42.65 
42.44 
41.88 
38.55 
30.88 
30.55 



27.33 
25.94 
23.56 
20.87 
20.50 
20.19 
19.38 
18.94 
19.43 
19.39 
21.55 
20.15 



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